ED probing misuse of ADAG firms' UBS accounts
17 Dec 2008
The Enforcement Directorate (ED) is investigating an earlier instance of misuse of accounts of Anil Dhirubhai Ambani Group-controlled Reliance Energy and Reliance Natural Resources (RNRL) by a few UBS employees, involving possible violations of the Foreign Exchange Management Act (Fema) and has written to the UK's Financial Services Authority seeking details of the alleged misuse of funds.
The secretive UBS had suspended four private bankers for various ''unauthorised activities having India connections''. The employees in the London branch of UBS had fraudulently made overdrafts in the accounts of two Indian companies.
The accounts belonged to Anil Dhirubhai Ambani Group firms Reliance Natural Resources (RNRL) and Reliance Energy (REL), which had raised funds through foreign currency convertible bonds (FCCBs) and external commercial borrowings (ECBs).
The money was suspected to have been used to buy participatory notes (PNs) - derivative instruments with Indian stocks as underlying by two UBS officials of Indian origin, who were later sacked by the bank.
The directorate is probing if the fraudsters had illegally obtained overdrafts against cash collateral security held in the account and transferred them to the accounts of diamond merchants based in India and Belgium.
The funds were used to buy stocks through a fund manager – Pluri Emerging Companies PCC Cell E Emerging Markets Growth Fund - using the participatory note route. Funds are also suspected to have been transferred to Brockway Inc.
The ED is probing any possible links the two ADAG companies may have with Pluri, Brockway and the diamond merchants.
