ED Arrests Former ADAG Executives Amitabh Jhunjhunwala, Amit Bapna In Alleged Money Laundering Case

Mumbai: The Enforcement Directorate (ED) has arrested Amitabh Jhunjhunwala and Amit Bapna, former senior executives of the Anil Dhirubhai Ambani Group (ADAG), in connection with an alleged money laundering case involving diversion of funds from Reliance Home Finance Ltd (RHFL) and Reliance Commercial Finance Ltd (RCFL), people aware of the development said. Reliance ADAG said Jhunjhunwala was no more associated with it.

Amitabh Jhunjhunwala earlier served as Group Managing Director of the Reliance Anil Ambani Group and Vice Chairman of Reliance Capital. Amit Bapna held a senior leadership position in Reliance Finance.

The two were arrested under Section 19 of the Prevention of Money Laundering Act (PMLA), 2002, for offences defined under Section 3 and punishable under Section 4 of the Act, and were produced before a special court in Delhi.

During arguments seeking custody, the ED alleged before the court the existence of a “pre-conceived and well-planned scheme” to siphon off public funds from RHFL and RCFL through a network of shell or paper companies allegedly created and controlled by ADAG under the guise of corporate loans.The agency alleged that the scheme defrauded banks, shareholders, investors and other public institutions.

According to the agency, both accused were aware of the shell entities to which corporate loans were sanctioned. It further alleged that Bapna played a key operational role in the sanctioning and disbursal of loans, acting on approvals from senior management, including Jhunjhunwala.

The agency also alleged that Bapna was involved in fund mobilisation, monitoring cash flows and overseeing treasury operations involving term loans, non-convertible debentures and commercial papers.Agency further alleged that the transaction structure was designed to circumvent regulatory norms and disclosure requirements, enabling layering and concealment of the origin of funds. 

The ED has argued that custodial interrogation is necessary to trace further proceeds of crime, identify other individuals involved, and prevent tampering with evidence or influencing witnesses. It also flagged a possible flight risk, stating that Bapna is currently employed with an Indonesia-based firm and holds a residence permit there.

The agency further submitted that custodial interrogation is required to confront the accused with documentary and digital evidence collected during the investigation.Multiple agencies, including the ED, the Central Bureau of Investigation (CBI) and Mumbai Police, are separately probing entities linked to ADAG.

A forensic audit by Grant Thornton India LLP has also flagged irregularities in RCFL transactions. The audit noted that the company had availed credit facilities from 24 lenders under a multiple banking arrangement, with Bank of Baroda acting as the lead bank under an inter-creditor agreement signed on July 6, 2019.The audit, commissioned in August 2019, highlighted  adverse findings in the utilisation of loan funds, including servicing of related entities and group companies, as well as circular transactions.

Of the Rs 4,766.62 crore traced in end utilisation, around 39 per cent (Rs 1,867.89 crore) was used for debt servicing of related entities and group companies, while about 25 per cent (Rs 1,199.29 crore) was flagged as potentially circular in nature,including Rs 557.37 crore categorised as pass-through transactions where the end use could not be established. Additionally, Rs 344.89 crore was invested in mutual funds, while Rs200.38 crore was used for loan disbursements.

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