ED Arrests Former ADAG Executives in Alleged RHFL and RCFL Fund Diversion Case

Mumbai: The Enforcement Directorate (ED) has taken into custody Amitabh Jhunjhunwala and Amit Bapna, both former senior officials of the Anil Dhirubhai Ambani Group (ADAG), in connection with an alleged money laundering investigation involving the diversion of funds from Reliance Home Finance Ltd (RHFL) and Reliance Commercial Finance Ltd (RCFL), according to individuals familiar with the matter. The Reliance ADAG group clarified that Jhunjhunwala is no longer associated with the organization.

Jhunjhunwala previously held key leadership roles as Group Managing Director of the Reliance Anil Ambani Group and Vice Chairman of Reliance Capital, while Bapna served in a senior executive capacity within Reliance Finance.

The arrests were carried out under Section 19 of the Prevention of Money Laundering Act (PMLA), 2002, for offences defined under Section 3 and punishable under Section 4. Following their arrest, both individuals were presented before a special court in Delhi.

During court proceedings seeking their custody, the ED alleged the existence of a “pre-conceived and well-planned scheme” designed to siphon off public funds from RHFL and RCFL. According to the agency, this was executed through a network of shell or paper entities allegedly established and controlled by ADAG, under the pretext of issuing corporate loans. The ED claimed that the scheme resulted in fraud against banks, shareholders, investors, and other public institutions.

The agency further stated that both accused were aware of the shell companies to which loans were sanctioned. It alleged that Bapna played a central operational role in approving and disbursing these loans, acting on directions from senior management, including Jhunjhunwala.

In addition, investigators claimed that Bapna was actively involved in raising funds, overseeing cash flows, and managing treasury operations linked to term loans, non-convertible debentures, and commercial paper instruments. The ED also contended that the structure of these transactions was deliberately crafted to bypass regulatory requirements and disclosure norms, thereby facilitating the layering of funds and concealing their origins.

The ED has argued before the court that custodial interrogation is essential to track additional proceeds of crime, identify other potential individuals involved, and prevent any interference with evidence or attempts to influence witnesses. It also raised concerns about a potential flight risk, noting that Bapna is currently employed by a firm based in Indonesia and possesses a residence permit there.

The agency emphasized that further custodial questioning is necessary to confront the accused with documentary and digital evidence gathered during the course of the investigation. The case is part of a broader probe, with multiple agencies—including the ED, the Central Bureau of Investigation (CBI), and the Mumbai Police—conducting parallel investigations into entities linked to ADAG.

Meanwhile, a forensic audit conducted by Grant Thornton India LLP has identified significant irregularities in transactions involving RCFL. The audit revealed that the company had secured credit facilities from 24 lenders under a multiple banking arrangement, with Bank of Baroda serving as the lead institution under an inter-creditor agreement dated July 6, 2019. Commissioned in August 2019, the audit pointed to adverse findings in how loan funds were utilized, including their use in servicing related entities and group companies, as well as the presence of circular transactions.

Out of the Rs 4,766.62 crore traced in end-use analysis, approximately 39 percent (Rs 1,867.89 crore) was used to service debt linked to related entities and group companies. Around 25 percent (Rs 1,199.29 crore) was identified as potentially circular in nature, including Rs 557.37 crore categorized as pass-through transactions where the ultimate use of funds could not be determined. Additionally, Rs 344.89 crore was invested in mutual funds, while Rs 200.38 crore was allocated toward loan disbursements.

By fLEXI tEAM