NEW DELHI, Oct. 11 -- The Enforcement Directorate (ED) on Saturday arrested Ashok Kumar Pal, the Chief Financial Officer of Reliance Power Ltd and a close friend of industrialist Anil Ambani, in connection with a money-laundering investigation that emanated from suspected forged bank guarantees involving the ADA Group.
Pal was held after interrogation at the ED office in Delhi and is likely to be presented before a magistrate. The arrest is part of a wider probe into money flows between ADA Group companies and specific banks, which investigators claim point towards diversion of funds and other improprieties.
The ADA issue has already drawn considerable regulatory and judicial attention. The ED's investigation goes hand-in-hand with independent action and accusations that entities of the ADA Group engaged in wholesale lending and recovery improprieties relating to Yes Bank and that enormous amounts of money were diverted through a series of layered transactions.
This enforcement activity comes in the wake of a recent Bombay High Court ruling that sustained State Bank of India's decision to classify certain loan accounts of Reliance Communications and its promoter as "fraud". The high court, in an order delivered earlier this month, found SBI's decision to tag the accounts legally valid and dismissed challenges to the bank's action. The court observed that RBI directions allow borrowers only limited procedural rights in the form of written representations.
SBI had already in June formally classified the loan accounts of Reliance Communications and Anil Ambani as fraud, on grounds of diversion of funds, covenant breaches and related-party transactions. Another public sector bank, Bank of Baroda, has also said that it treated some ADA-related exposures as fraud-tagged.
The unfolding investigations are across agencies and legal processes. As enforcement agencies go after financial crime and money-laundering aspects, banks remain to work through recovery and regulator channels. Reliance Power and other concerned parties are yet to put out detailed public statements about the latest developments.
The arrest of Pal represents the high point so far of enforcement activity linked to the ADA-Yes Bank incident and surrounding charges and reflects ongoing regulatory and investigative attention to large corporate lending and governance conduct. Additional court hearings and agency actions are forthcoming in the next few days.
Published by HT Digital Content Services with permission from Millennium Post.