Mumbai: Capital market regulator Securities and Exchange Board of India (Sebi) has asked Anil Ambani, two companies that he heads and four executives belonging to the group for explanations over what it referred to as “certain dealings”, without elaborating.
It also said that Ambani and the four officials belonging to Reliance Infrastructure Ltd (R-Infra) would be given an opportunity to appear in person before the regulator on 3 September, in a posting on its website. A hearing was heard on Monday regarding the issue, which also involves Reliance Natural Resources Ltd (RNRL), following a notice issued on 7 June, the regulator said.
At Monday’s hearing, which was attended by Deepak Sanchety, advocate for RNRL and R-Infra, and the company secretaries of the two firms, Sebi said it was decided that the documents that the regulator has relied upon will be available for inspection up to 17 August. It also directed the executives and the companies to submit replies on the charges by 27 August.
Ambani has been cited in the notice as chairman of RNRL and as chairman and managing director of R-Infra. Of the four executives, Satish Seth is vice-chairman of R-Infra, while S.C. Gupta, J.P. Chalasani and Lalit Jalan are directors of the company.
“Though there is no request to that effect from the other six noticees, in deference to principles of natural justice, they are hereby directed, if they wish, to take inspection of the relevant documents on August 17, 2010, at 10 AM, submit replies by August 27, 2010, and appear for personal hearing at 10 AM on September 03, 2010,” M.S. Sahoo, whole-time member of Sebi, said in the order.
“The matter is sub judice. Reliance Infrastructure Ltd, Reliance Natural Resources Ltd, and the concerned individual directors will comply with due process of Sebi, and are confident of suitable resolution of the matter, as legally advised,” a Reliance-Anil Dhirubhai Ambani Group (R-Adag) spokesperson said in an email response.
Neither Sebi nor the company gave any details about the case.
The Union government had on 1 December 2009, in a written reply to a query raised in the Rajya Sabha, said that three firms of R-Adag—R-Infra, RNRL and Reliance Communication Ltd—had violated overseas debt norms.
In a written reply, minister of state for finance Namo Narain Meena said end-use violations had been observed by the Reserve Bank of India (RBI) regarding two external commercial borrowing (ECB) transactions—of $360 million (around Rs1,665 crore today) and $150 million—by R-Infra.
The company brought the proceeds raised through the ECBs to India and these were not deployed for the declared end-use in violation of existing guidelines, he said.
RNRL issued foreign currency convertible bonds of $300 million for the purpose of pursuing projects under the automatic route. As much as $275 million was brought to India in May 2007 and was parked in debt mutual funds pending utilization.
Subsequently, in August 2008, an amount of Rs1,160 crore was invested in a wholly owned subsidiary in Singapore, the minister said.
Since the alleged transactions have a cross-border angle and since RBI does not have privileges of investigation, the issue had been referred to the enforcement directorate for investigation, the minister said.