Three ADAG Firms Under Govt Scanner
Reliance Infrastructure, Reliance Natural Resources and Reliance Communication have violated overseas debt norms
The government on Tuesday said three Anil Ambani group firms - Reliance Infrastructure, Reliance Natural Resources and Reliance Communication -- have violated overseas debt norms.
The matter pertaining to Reliance Infrastructure has been referred to Enforcement Directorate over non-payment of penalty and that of RNRL for further probe, also by ED.
In a written reply in Rajya Sabha, Minister of state for Finance Namo Narain Meena said end-use violations have been observed by RBI in respect of two external commercial borrowing transactions by Reliance Infrastructure -- $360 million and $150 million.
The company brought the proceeds raised through the ECBs to
A penalty of Rs 124.68 crore was imposed on Reliance Infrastructure, he said, adding that since it did not pay the penalty in accordance with the rules and provisions of FEMA, the violations were refered to the Directorate of Enforcement (DoE) in December, 2008 for adjudication.
Reliance Natural Resources
Ltd issued foreign currency convertible bonds of $300 million for the
purpose of project under the automatic route. As much as $275 million (Rs 1,127
crore) were brought to
Subsequently, in August 2008, an amount of Rs 1,160 crore ($275
million) was invested in a wholly owned subsidiary in
Since the alleged transactions have cross-border angle and since RBI does not have privileges of investigation, the issue has been referred to the DoE for undertaking investigation in the matter.
He said a study of audited report for the year 2007 revealed that the unutilised money of Rs 5,142 crore raised through FCCBs by RCom has been deposited interest free with a wholly owned subsidiary, which in turn has held the same in bank deposits.
After, ascertaining the facts, the company was advised to apply for compounding. The company in its response has stated that the proceeds of the FCCBs were utilised for permitted end-use--telecom capital expenditure taking into account the business exigencies and denied any contravention of the regulation, the minister said, adding that the reply is being examined for taking further action.
As per the existing rules, corporate which have violated the existing ECB policy and are under investigation by RBI and/or DoE are allowed to avail ECB only under the approval route, the minister informed.
Source: http://www.businessworld.in/bw/storyContent/2009_12_01_Three_ADAG_Firms_Under_Govt_Scanner.html
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