Anil Ambani, Reliance Communications Under Scrutiny: CBI Investigates Alleged LIC Fraud

Anil Ambani and Reliance Communications are under renewed scrutiny as the CBI launches a fresh investigation into allegations of a Rs 3,750 crore fraud against the Life Insurance Corporation (LIC) involving Non Convertible Debentures.

Photograph: Prashant Waydande/Reuters

Key Points

The CBI has filed a new case against Anil Ambani and Reliance Communications for allegedly defrauding LIC of Rs 3,750 crore.
The case involves alleged conspiracy, cheating, misappropriation, and violations of the Prevention of Corruption Act.
LIC claims it was fraudulently induced to subscribe to Non Convertible Debentures (NCDs) based on false representations by Reliance Communications.
A forensic audit revealed alleged misutilisation of funds, routing of funds through subsidiaries, and overstatement of security by RCOM.

The CBI on Wednesday registered a fresh case against industrialist Anil Ambani and Reliance Communications Ltd for allegedly causing a loss of Rs 3,750 crore to Life Insurance Corporation (LIC) of India, officials said.

The CBI has filed the case for the alleged offences of conspiracy, cheating and misappropriation and under the provisions of the Prevention of Corruption Act on a complaint from the LIC, making it the fourth case against the company and Anil Ambani, they said.

The agency has alleged that LIC was fraudulently induced to subscribe to Non Convertible Debentures (NCDs) worth Rs. 4500 crore between 2009 and 2012 on the basis of false representations made by Reliance Communications Ltd. and its management regarding the financial health of the company, and security and asset cover offered to LIC while subscribing to the NCDs.

The insurer suffered a loss of over Rs 3,750 crore and ordered a forensic audit against the company.

Forensic Audit Findings

The forensic audit report dated October 15, 2020, conducted by BDO India LLP, reported that RCOM and its management had resorted to misutilisation of funds raised from banks and financial institutions, routing of funds through subsidiaries, misuse of sale invoice financing, discounting of fictitious bills, systematic siphoning of funds through inter-company deposits/shell related entities, creating and write-off of fictitious debtors and receivables and gross overstatement of security.

It said there was a mismatch between the charges and the assets.

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