Former Reliance Executives Remanded in Custody Over Alleged ₹11,500 Crore Shell Company Fraud

A Delhi court has remanded two former high-ranking executives of the Reliance Anil Dhirubhai Ambani Group (ADAG) to five days in police custody, following their arrest by the Enforcement Directorate (ED). The agency is investigating the pair for their alleged roles in a sophisticated money laundering scheme involving a “complex web” of shell companies used to divert approximately ₹11,500 crore ($1.5 billion) in bank loans.

Special Judge Hasan Anzar of the Rouse Avenue Court ordered the custody of Amitabh Jhunjhunwala, former vice-chairman of Reliance Capital, and Amit Bapna, the company’s former chief financial officer. The ED requested 10 days to interrogate the men, arguing that the full extent of the financial trail—which investigators say spans some 45 entities—needs to be mapped to recover the proceeds of crime.

Background and Context

The case is part of a broader investigation into banking irregularities that could total as much as ₹40,000 crore. The specific charges against the executives centre on the alleged diversion of public funds from Reliance Home Finance and Reliance Commercial Finance. According to the agency’s findings, loans sanctioned to various borrowers were not used for stated business purposes but were instead systematically siphoned off through a network of interconnected companies.

This alleged fraud is being prosecuted under the strict provisions of the Prevention of Money Laundering Act (PMLA). The ED’s investigation suggests that the manipulated financial operations were designed to enrich top-tier corporate insiders at the expense of lenders and shareholders, leaving a trail of bad debt across the Indian banking sector.

Key Figures and Entities

The investigation focuses heavily on the actions of Mr. Jhunjhunwala and Mr. Bapna during their tenure at the helm of Reliance Capital. Court documents reviewed by reporters indicate that the ED believes these individuals played pivotal roles in authorising and overseeing the flow of funds to shell entities.

According to the court order dated April 16, the ED has presented evidence suggesting that many of the companies receiving the funds were under the control of the Reliance Anil Ambani Group. Special Public Prosecutor Simon Benjamin, representing the agency, argued that the accused needed to be confronted with documentary evidence to determine their individual culpability and to identify other potential conspirators.

Legal and Financial Mechanisms

Central to the prosecution’s case is the mechanism of “round-tripping,” a financial tactic where funds are moved out of an entity only to be brought back in disguised as legitimate income or investment. In this instance, the ED alleges that funds were disbursed as loans to various entities before being cycled through a series of shell companies—firms that allegedly existed only on paper.

This layering of transactions was reportedly intended to obscure the ultimate beneficiaries of the funds. By routing money through these entities, the perpetrators allegedly masked the diversion of over ₹6,200 crore in proceeds of crime, making it difficult for auditors and regulators to trace the origin and destination of the assets.

International Implications and Policy Response

While the current legal proceedings are centered in Delhi, the case highlights the ongoing global challenge of regulating shell companies and preventing the misuse of corporate structures. The scale of the alleged fraud—nearly ₹11,500 crore—underscores the vulnerabilities in financial systems that allow for the rapid movement of illicit assets across corporate boundaries.

Financial crime watchdogs have long argued that enhanced transparency regarding beneficial ownership is necessary to prevent similar schemes. The outcome of this high-profile trial could influence future regulatory reforms, as Indian authorities continue to grapple with the legacy of non-performing assets and systemic banking fraud.

Sources

This report draws on court orders from the Rouse Avenue Court, statements by the Enforcement Directorate, and public filings related to the investigation into Reliance Capital and its subsidiaries.