New Delhi: Discussion on companies run by the Ambani brothers — Reliance Infrastructure and Reliance Petroleum — on Wednesday took place in the Lok Sabha in connection with alleged violations of government regulations.
Finance Minister Pranab Mukherjee, in a written reply, said Mukesh Ambani-led Reliance Petroleum Ltd (RPL) was one of the 19 companies against which complaints of insider trading were received by market regulator Sebi.
“During the last three years, including the current year (up to 31 Jan 2009), Sebi is in receipt of complaints alleging insider trading in the shares of 19 listed companies. One of (them) is against Reliance Petroleum Ltd, an oil-based company,” he added.
Responding to another written question, Minister of State for Finance Pawan Kumar Bansal said that the Reserve Bank referred the cases of violation of the External Commercial Borrowings (ECB) regulations by Anil Ambani-led Reliance Infrastructure Ltd, earlier known as Reliance Energy, to the Enforcement Directorate.
He added “RBI referred the FEMA violations relating to the two ECBs ($360 million and $150 million raised in July and November 2006 respectively) to the Directorate of Enforcement on 7 November, 2008 for necessary action”.
Mukherjee further said that Sebi received complaints of insider trading against nine companies in 2006, six in 2007, three in 2008 and one in 2009. He, however, did not name any company except RPL.
As insider trading is an offence, Mukherjee said Sebi has been “taking proactive measures aimed at greater level of investor protection, by passing order of debarment, imposing monetary penalty and initiating prosecution”.
The case against RPL pertains to volatility observed in the shares of the company in November 2007, when its price touched an intraday life-time high of Rs295 on the Bombay Stock Exchange.
Following volatility, market regulator Sebi had asked the BSE and NSE to examine the trading in the scrip of RPL in the cash and derivatives markets on 1 November and 29 November, 2007.
As regards Reliance Infrastructure, the case pertains to partly investing the proceeds of the ECBs by the firm in fixed deposits and debt mutual funds, which was not permitted by the then ECB guidelines.
Reliance Infrastructure had raised $360 million and $150 million as ECBs in July 2006 and November 2006, respectively, and after bringing in the proceeds, parked part of the money in debt mutual funds, pending utilisation of funds for declared end-use.
“As per the ECB guidelines, then in force, the ECB proceeds were required to be parked overseas until actual requirement in India. Further, utilisation of ECBs proceeds is not permitted for investment in the capital market,” Bansal said.