ED Arrests Former ADAG Executives In Alleged ‘Well-Planned’ Loan Fraud Involving Shell Firms

Mumbai, April 16: The Enforcement Directorate (ED) has arrested Amitabh Jhunjhunwala and Amit Bapna, former senior executives of the Anil Dhirubhai Ambani Group (ADAG), in connection with a money laundering probe into alleged irregularities in loan disbursals by Reliance Home Finance Ltd (RHFL) and Reliance Commercial Finance Ltd (RCFL).

Court grants custody

Both were arrested under provisions of the Prevention of Money Laundering Act (PMLA) and produced before a special court in Delhi’s Rouse Avenue, which granted the agency five days’ custodial remand.

Alleged planned diversion of funds

The ED told the court that the case involves a “pre-conceived and well-planned scheme” to siphon off public funds through a network of alleged shell or paper companies floated under the guise of corporate lending. The agency alleged that the transactions resulted in wrongful losses to banks, financial institutions, shareholders, and investors.

Role of key accused

According to the ED, Jhunjhunwala, who served as Group Chief Financial Officer (CFO) of Reliance Capital Ltd (RCAP) between 2007 and 2019 and was also a director in RHFL, played a key role in sanctioning and disbursing loans to entities now under scrutiny. The agency argued that his position placed him in oversight of financial flows across group companies, making him aware of, or responsible for, the structuring and movement of funds.

Bapna, who held senior finance roles within the group, is being examined for his alleged role in the execution of these transactions, including processing loan proposals, coordinating disbursals, and tracking utilisation across borrower entities.

Questionable loan practices

The ED told the court that several loans were sanctioned to entities that, on preliminary scrutiny, showed weak financials, negligible business activity, and limited repayment capacity. Investigators have flagged commonalities across a number of such borrowers, including shared directors, addresses, and layered shareholding, suggesting they may have functioned as conduits.

The agency further alleged that internal credit appraisal mechanisms were diluted or bypassed in certain cases, with loan proposals cleared despite adverse risk indicators. In some instances, the end-use of funds was either inadequately monitored or allegedly misrepresented at the time of sanction, the ED has submitted.

Complex money trail

Post disbursal, a significant portion of the funds is alleged to have been routed through multiple entities via inter-corporate deposits, onward lending, and structured transfers in a manner that obscured the audit trail. Part of the funds, the ED said, was used to service existing liabilities of related or group entities, indicating a pattern of “evergreening” and recycling of loans within the group structure.

Scale of the probe

The ED probe centres on loan exposures exceeding Rs 11,000 crore by RHFL and RCFL, with investigators examining alleged diversion through a network of interconnected entities. Citing a forensic audit, the agency told the court it has traced end utilisation of Rs 4,766.62 crore as suspected proceeds of crime, flagging debt servicing of related entities, circular transactions, and pass-through routing as part of the money trail under investigation.

Officials said analysis of bank records and financial documents has revealed a complex chain of transactions involving multiple entities suspected to be shell companies used to layer funds and disguise the origin and end-use of alleged proceeds of crime. The agency told the court it is examining extensive banking data, loan files, board approvals, and internal communications, along with digital evidence such as emails, to establish the decision-making chain and identify ultimate beneficiaries.

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Company response

In a statement, the Reliance Group said Jhunjhunwala had exited the group in September 2019 and had no association with it thereafter. It added that during his tenure, he held senior leadership roles, including Group Managing Director and Vice Chairman of Reliance Capital Ltd.

The group also said Bapna ceased to be associated with it in December 2019.

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