The Securities and Exchange Board of India (SEBI) has recently made a significant decision to bar industrialist Anil Ambani from the securities market for a period of five years. This action comes as a result of allegations of fund diversion from Reliance Home Finance, a company under the umbrella of the Anil Dhirubhai Ambani Group (ADA Group). Along with Anil Ambani, 24 other entities, including former key officials of Reliance Home Finance, have also been barred from the securities market for their involvement in the fraudulent scheme.
SEBI’s investigation revealed that Anil Ambani, in collaboration with key managerial personnel of Reliance Home Finance, orchestrated a fraudulent scheme to siphon off funds from the company by disguising them as loans to entities linked to him. Despite directives from the Board of Directors of RHFL to cease such lending practices and regular reviews of corporate loans, the company’s management ignored these orders. This failure of governance, driven by certain key managerial personnel under the influence of Anil Ambani, led to the illegal diversion of funds.
The regulator’s findings establish the existence of a fraudulent scheme designed by Anil Ambani and executed by the key managerial personnel of RHFL to siphon off funds from the public listed company. Anil Ambani utilized his position as the chairperson of the ADA Group and his significant indirect shareholding in the holding company of RHFL to carry out the fraud. The cavalier approach of the company’s management and promoter in approving loans to credit unworthy entities with close links to the promoters of RHFL further highlights the sinister nature of the scheme.
The consequences of this fraudulent activity have been severe, with RHFL defaulting on its debt obligations and facing resolution under the RBI Framework. Shareholders of the company have suffered significant losses, with the share price plummeting from ₹59.60 in March 2018 to just ₹0.75 in March 2020. Over nine lakh shareholders remain invested in RHFL, facing the repercussions of the illegal diversion of funds.
In addition to Anil Ambani, SEBI has imposed fines on the other entities involved in the fraudulent scheme. Former key officials of Reliance Home Finance, Amit Bapna, Ravindra Sudhalkar, and Pinkesh R Shah, have also been restrained from the securities market and fined for their roles in the case. The remaining entities, including Reliance Unicorn Enterprises, Reliance Exchange Next Ltd, Reliance Commercial Finance Ltd, Reliance Cleangen Ltd, Reliance Business Broadcast News Holdings Ltd, and Reliance Big Entertainment Private Ltd, have been penalized for their involvement in either receiving the illegally obtained loans or facilitating the illegal diversion of funds from RHFL.
This decision by SEBI serves as a strong message against fraudulent activities in the securities market and underscores the importance of governance and compliance in corporate entities. The enforcement action taken against Anil Ambani and the other entities involved in the fund diversion scheme highlights the regulatory authority’s commitment to maintaining the integrity and transparency of the securities market.