Some financial transactions attract attention because of the scale and nature of the irregularities being brought to light. Others may warrant scrutiny because of the profile of the people involved. The case in this article deserves close examination on both counts. The protagonist of this tale is India’s richest man, Mukesh Ambani, the chairman and managing director of Reliance Industries Limited (RIL), India’s biggest private corporate conglomerate. The supporting character is a former Indian National Congress member of parliament associated with the Reliance Group, Annu Tandon.
On the sidelines are unnamed executives from the overseas wing of one of India’s biggest private sector banks, ICICI (formerly the Industrial Credit and Investment Corporation of India) Bank. The plot also includes officials from two regulatory authorities, the Reserve Bank of India (RBI), the country’s central bank and apex monetary authority, and the Enforcement Directorate (ED) in the Ministry of Finance, which is responsible for enforcing the Foreign Exchange Management Act (FEMA) of 1999.
It was on 19 July 2013, about a year and a half ago, that the ED wrote to the RBI, seeking its advice on the legality of a loan of Rs 6,530.36 crore that was granted by an overseas branch of ICICI bank to a now-defunct firm called Biometrix Marketing Pte Ltd that was based in Singapore and associated with the Reliance Group. Curiously, this money, given in the form of a loan, later returned to India—as alleged by First Secretary (Economic) GT Venkateswara Rao of the Indian High Commision in Singapore in the investigation he conducted on investments made by Biometrix in Reliance Group companies—as foreign direct investment (FDI) through the issuance of certain financial instruments called compulsorily convertible preferential shares (CCPS) by Biometrix in four Reliance Group companies—Reliance Gas Transportation Infrastructure, Relogistics Infrastructure, Reliance Ports and Reliance Utilities. This investment was the highest inflow of FDI into India during 2007–08 from a single corporate entity based in Singapore.
Senior officials of the ED have said that, since the letter was written, Annu Tandon and other senior figures connected with RIL have been questioned about the transactions relating to Biometrix and their statements have been recorded.
Rao's investigation into Biometrix's investments was first suggested in July 2011 by the Department of Industrial Policy and Promotion (DIPP) in the Union Ministry of Industry and Commerce, which is responsible for formulating and enforcing policies on FDI. The investigation was thereafter conducted by the High Commission of India in Singapore, which resulted in the preparation of a “commercial intelligence report” dated 31 August 2011.