If you think you have India’s white-collar crime story down, think again. The CBI has filed its first charge sheet in the Reliance ADA matter, ratcheting up the pressure on a probe that involves public sector banks and claims of nearly Rs 3,000 crore in write-offs. With the Supreme Court in the loop on related files, expect the heat to be turned up on corporate-banking relations.
What the first charge sheet is all about
On Friday, the CBI handed the document over to a special court in Mumbai. It puts 16 people in the crosshairs for what it says is the misuse of loans from a Reliance ADA Group entity.
You will find Reliance Communications Limited and five of its top brass among the accused, as well as ten from SBI, Bank of Maharashtra and the old Syndicate Bank.
They are being charged with the usual: criminal conspiracy, cheating, and misappropriation per the IPC, plus some misconduct under the Prevention of Corruption Act. So goes the CBI’s press release.
Following the money
There are three items at the heart of this: a term loan of Rs 1,200 crore from SBI, a letter of credit for Rs 500 crore from Bank of Maharashtra and another for Rs 350 crore from Syndicate Bank. The CBI says these were not used as they should have been.
This whole thing was set in motion by an SBI complaint against Rcom and Anil Ambani, citing a Rs 2,929.05 crore hit to the bank. The CBI is leaving the door open to look into other loans from the wider group.
But the FIR tells a bigger story. A syndicate of 11 banks, with SBI in the lead, had given ‘Rupee Term Loans’ to Rcom. In all, 17 Public Sector Banks were on the hook for an exposure of Rs 19,694.33 crore.
Who is in the dock
The CBI has made a point of singling out:
– Reliance Communications Limited
– Five of the company’s senior executives
– Ten from SBI, BOM and Syndicate Bank
A case with some weight for the market
This is part of a larger inquest into the Anil Ambani stable. The CBI has 6 FIRs on the books for Rcom, RHFL, RCFL and RTL, to name a few.
Then there are seven regular cases of alleged fraud by the group that the Supreme Court is keeping an eye on. It is a clear signal of what is at stake for the public purse and how state-run banks are run.
When you see the kind of numbers and the spread across public sector banks in the FIRs, it makes for some hard reading for any risk manager concerned with due diligence.
The investigators’ side of it
To the CBI, the top men at Rcom and the three banks are guilty of everything from cheating to criminal misappropriation and running afoul of anti-corruption statutes.
In a note to the press, they called it a matter of public funds being siphoned off. This charge sheet is just one move; they are still looking for any other conspirators who may have been part of the loan mix.
Keep an eye on
As things play out, here is where the focus will be:
– How the court handles the first charge sheet
– What the CBI does with the rest of the loans
– Word from the RCs the Supreme Court is following
Looking ahead
Now it is up to the court to make of the charge sheet what it will, and to see what the accused have to say. The CBI has not ruled out a deeper dive into the consortium’s lending.
For the banking world, this is just more evidence of a certain kind of enforcement. With the figures out there and several FIRs in the works, every step will be parsed for what it means for recovery and who is held to account.
