MUMBAI: Market regulator Securities and Exchange Board of India (SEBI) on Friday agreed to settle a case of fraudulent use and misappropriation of funds raised by two Anil Ambani-controlled companies abroad, by levying a collective fine of `50 crore on Reliance Infrastructure Ltd (RelInfra) and Reliance Natural Resources Ltd (RNRL) and barring the company and promoter from accessing capital markets for two and one year respectively.
The case pertains to the two junior Ambani group companies RelInfra and RNRL raising external commercial borrowings (ECBs) and foreign currency convertible bonds (FCCBs) and using them to invest in stock markets to manipulate price of another group company Reliance Communications Ltd (RCL) using investment vehicles based abroad for the same.
After this malpractice was brought to SEBI’s notice it initiated an inquiry under various Acts of prohibition of fraudulent and unfair trade practices in securities market and show cause notices were issued to the companies and key promoters, including Anil Ambani, Satish Seth, SG Gupta, Lalit Jalan and J P Chalsani in June 2010.
While the proceedings were still in progress, Anil Ambani and his companies made a proposal for settlement of proceedings through a consent and SEBI passed the order in which it has levied fine of `25 crore each on both the companies and has ordered that they should not make any investments in shares until December 2012, while the individual directors have been directed not to invest in shares till December 2011.
Interestingly, this is just one inquiry in the said case that the Ambani group has settled. The Reserve Bank of India (RBI) is also looking into the matter and having found the company guilty of several violations has already slapped a fine of `120 crore (highest ever levied) on the said parties which has yet to be settled.
RBI will most certainly refer the matter to Enforcement Directorate to probe FEMA violations.
On the other hand, the London-based bank, UBS which managed the ECBs/ FCCBs, was also found guilt by the Financial Services Authority (FSA) of UK in the same case and has fined them 8 million pounds, again highest ever in the history in that country.