Reliance Power CFO Detained as ED Probes Massive Financial Irregularities

The Enforcement Directorate (ED) has arrested Ashok Kumar Pal, Chief Financial Officer of Reliance Power, as part of an ongoing money laundering investigation into alleged loan frauds linked to the Reliance Anil Ambani Group. The arrest, reported by NDTV Profit, escalates scrutiny on the debt-ridden conglomerate, following searches at premises of 60 companies and 22 individuals in Mumbai and Delhi.

The probe, initiated under the Prevention of Money Laundering Act (PMLA), stems from two First Information Reports (FIRs) filed by the Central Bureau of Investigation (CBI) and targets suspected diversion of public funds through a network of shell companies. Pal's role in the group's financial operations places him at the center of allegations involving billions in loans turned non-performing assets (NPAs).

At the heart of the case are Reliance Home Finance Ltd. (RHFL) and Reliance Commercial Finance Ltd. (RCFL), both subsidiaries of the Reliance Anil Ambani Group, which extended loans totaling Rs 12,524 crore, predominantly to affiliated firms within the ecosystem. ED preliminary findings reveal that Rs 6,931 crore of these have been classified as NPAs, with evidence of "circular lending"—funds routed back to other group entities in what investigators describe as a deliberate scheme to siphon money. A Grant Thornton audit highlighted violations of lending norms, including unauthorized diversions.

Former Yes Bank CEO Rana Kapoor allegedly facilitated the approvals, with credit extended to his family-linked firms such as RAB Enterprises, Imagine Estates, and Bliss House. The case builds on a June declaration by the State Bank of India labeling Reliance Communications and promoter Anil Ambani's accounts as fraudulent, prompting a CBI complaint.

The investigation gained momentum after the Securities and Exchange Board of India (SEBI) barred Anil Ambani and several senior executives from securities markets for five years, imposing penalties for fund misappropriation from RHFL. ED officials informed the Rajya Sabha of the PMLA probe, underscoring its scale. During recent raids, authorities seized documents and digital records from group offices, uncovering a web of transactions designed to obscure the trail of public money.

Ambani, once India's third-richest individual, has faced mounting legal and financial woes, including personal insolvency proceedings in the UK and asset sales to settle debts exceeding Rs 1 lakh crore. Neither Reliance entities nor Ambani have issued public statements on Pal's arrest, but sources indicate cooperation with authorities.

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This development signals intensified regulatory pressure on corporate lending practices, raising questions about governance in high-debt conglomerates. As the ED prepares to present Pal before a special court for remand, the probe could implicate more executives and lead to asset attachments. For the Reliance Group, already navigating restructuring under the Insolvency and Bankruptcy Code, the fallout threatens further erosion of investor confidence and potential recovery hurdles in a tightening economic landscape.

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