The Swiss banking trail hits the market

An MP from UP has alleged that the Anil Dhirubhai Ambani Group had diverted funds raised through External Commercial Borrowings and Foreign Currency Convertible Bonds into stock market operations through Swiss bank UBS, which were allegedly used for large-scale unauthorised trades

Remember Raashid Alvi? He is the Member of Parliament (MP) who used to dash off letters against the Reliance Group of companies, when he was not a member of the Congress Party. The Uttar Pradesh-based MP is still at it; this time his attention is focused on the alleged shenanigans of the Anil Dhirubhai Ambani Group (ADAG)—especially the incredible allegations about unauthorised trading in the accounts of a couple of diamond traders out of the London branch of Union Bank of Switzerland (UBS).

Part of this is already in the public domain in the form of the ban on Barclays Bank and Societe Generale by the Securities and Exchange Board of India (SEBI) in January this year. SEBI has barred these entities from issuing Participatory Notes (PNs) and Offshore Derivative Instruments (ODIs) after they were found fudging the beneficial owner in a case involving the shares of Reliance Communications. Now Mr Alvi has taken the story further.

On 1 February 2010, he wrote to the Enforcement Directorate (ED) demanding action in the ‘money laundering scam’ that was brought to the attention of the Directorate of Revenue Intelligence (DRI) way back in 2008. This time he draws attention to two other company shares —Reliance Natural Resources Ltd (RNRL) and Reliance Energy Ltd (REL).

The crux of the allegation is that the ADAG diverted funds raised through External Commercial Borrowings (ECB) and Foreign Currency Convertible Bonds (FCCB) into stock market operations through UBS. The funds were moved by UBS into the dormant accounts of some diamond merchants and then used to conduct large-scale unauthorised trades running into several billions of dollars. This was done by routing the money into the Indian capital market in the form of PNs and ODIs through a Mauritius-based entity called Pluri Emerging Company PCC.

Mr Alvi has asked the ED why it is not willing to pursue the matter, even though the Financial Services Authority (FSA) of the UK has written to it (on 17 March 2009) indicating that it has information about the case and is willing to share it.

The MP has further written to all the regulatory agencies, including the Reserve Bank of India (RBI) and the SEBI and the Chairman of the Central Board of Direct Taxes (CBDT) asking why they are uninterested in pursuing the investigation.

As with everything else, we hear that the pressure to investigate the ADAG comes from the rival Ambani camp and regulators, who have no qualms about persecuting legitimate business and are dragging their feet on this issue. Some also argue that if the ED and tax agencies had really gone after the biggest cases of transferring funds overseas, then there wouldn't be so much Indian money stashed in Swiss bank accounts.

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    1 decade ago

    Congress never wanted to do anything about blackmoney going out of India may be because of its own vested interest. Had they wanted to do something they could have done it long back as they ruled this country most of the times in last 60 years after independence (barring few exceptions) and many a times with two third majority or thumping majority with all yesmen around. It was expected that our existing Prime Minister Dr. Manmohan Singhji would take some action against black money as he has clean image and had been R.B.I. Governor and Finance Minister of the country earlier. Moreover he is an Economist of repute and undoubted integrety. Who should we hope would do something about the black money if our Prime Minister cannot do anything? Rahul Gandhi? The sad part is even our opposition BJP also is tight lipped though bringing black money back to India was a part of its political agenda in the last elections. Our Parliamentarians wast hours on debating issues which have nothing to do with citizen of this country but no one has time or inclination to take up an issue which will have great positive impact on all citizen of India. If our own money (Black Money) is brought back to this country many good things would happen. Umpteen times mailes have been exchanged by the common man of the country. Many a times articles are written in the news papeers. I think we need to do something collectively on national level and we are ready to support you if you intend to plan some movement. It is least to expect that politicians of this country would do anything as they are the main players in the game with others to generate black money and protect people who have it. Lord save this nation!


    1 decade ago

    The ED may be afraid which Black Fat Cat will come out of the bag. They have been serving the Congress masters for most of the 60+ years and they very well know there is more Bofors, Win Chaddhas, Harshad Mehtas and Sibu Sarans hidden all these years

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