ED Seizes Rs 2,033 Crore in Assets of Reliance Power Over FEMA Violations

The Enforcement Directorate (ED) announced on Wednesday that it has seized domestic assets belonging to Reliance Power Ltd (RPL), an entity within the Reliance Anil Ambani Group, valued at Rs 2,033 crore. This regulatory action was taken under the Foreign Exchange Management Act (FEMA) following allegations that the company siphoned assets of an equivalent value to tax havens located in the British Virgin Islands and the Cayman Islands.According to the federal agency, the seized assets include the firm's bank balances and its shareholding in Sasan Power Limited. The ED’s Headquarter Investigation Unit stated that these assets in India are equivalent in value to the foreign exchange held abroad in contravention of FEMA regulations. The agency noted that its probe was prompted by Securities and Exchange Board of India (SEBI) findings, which highlighted write-offs and provisions totaling Rs 2,101.46 crore made by the company in its books of account. Investigators determined that these write-offs were tied to overseas investments and advances funneled to offshore entities.The ED detailed that its inquiry revealed Reliance Natural Resources Ltd, which has since merged with RPL, raised $300 million through foreign currency convertible bonds in 2006. A significant portion of this amount—$275 million—was invested in its wholly-owned Singapore subsidiary, Reliance Natural Resources (Singapore) Pte Ltd (RNRL-S). The agency alleged that these funds were placed as deposits with Deutsche Bank in Geneva and subsequently used as collateral for loans extended to entities based in the British Virgin Islands.Further investigation indicated that these BVI-based entities were managed and controlled from India by the Reliance Anil Ambani Group through individuals acting on behalf of the group. The agency claimed that the loan proceeds were utilized for various purposes, including the temporary round-tripping of funds back into India via foreign entities based in Mauritius, ostensibly to benefit the parent group. When the BVI entities failed to repay the loans to Deutsche Bank, the ED alleged that documents were fabricated and backdated to present these transactions as genuine business dealings between the company and its Indonesian subsidiaries.In a formal statement released to the Bombay Stock Exchange and National Stock Exchange on Tuesday, Reliance Power addressed the seizure. The company maintained that the ED’s order pertains to foreign currency convertible bonds issued 20 years ago and overseas investments made in 2008 with the necessary approvals. The firm emphasized that the seized shares of Sasan Power Ltd have been pledged to the Power Finance Corporation, a government undertaking, under security arrangements that have been in place for more than a decade.This is not the first time the group has faced such actions; the ED has previously attached various assets linked to the Anil Ambani group, including residential properties in Mumbai, as part of broader money laundering cases involving over Rs 40,000 crore. The ED had conducted searches in March to gather evidence, which included recording statements from multiple persons. The agency confirmed that the investigation into these transactions is currently ongoing.