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The Enforcement Directorate, which is investigating possible violations of the Foreign Exchange Management Act by some former UBS employees, has written to the UK's Financial Services Authority, seeking details of the alleged misuse of accounts of Anil Dhirubhai Ambani Group-controlled Reliance Energy and Reliance Natural Resources.
The agency is probing if the executives, who have been sacked by the Swiss bank, had illegally obtained overdrafts against cash collateral security held in the account and transferred them into the accounts of 10 diamond merchants based in India and Belgium.
The funds were then allegedly pumped into the stock market 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 Indian agency is also probing if there was any link between the two ADAG companies, Pluri, Brockway and the diamond merchants.
Reliance Energy and RNRL, which had raised funds through foreign currency convertible bonds and external commercial borrowings, had kept the funds in accounts maintained with UBS, London.
In response to a questionnaire, an ADAG spokesperson said, "The ECB/FCCB proceeds of Reliance Energy and RNRL have been deployed in bank deposits, money market instruments, etc in accordance with RBI rules and regulations, and have been repatriated to India way back in April/May 2007. No borrowings have been made by us against the said proceeds at any time.
We are in full compliance with Fema and all applicable rules and regulations, and have duly filed the prescribed reports, Chartered Accountants' certificates, etc. with RBI from time to time. We have not received any enquiries and/or communication from any government agency regarding this matter, and are not aware of the same."
Spokespersons for FSA and UBS refused to comment on the issue. The ED has sought to check if UBS had conducted investigations into some of the issues and if FSA was kept in the loop. In addition, the agency has sought the addresses of two Indian nationals- Sachin Karpe and Jaspreet Ahuja- who are said to have been employed with UBS, London.
It has also sought from UK authorities a host of other information, including details of the accounts maintained by RNRL and Reliance Energy, the mode and manner in which the credits were made, the overdraft and other credit facilities available to the two companies.
The details of the funds transferred from the diamond dealers' accounts to that of Pluri or any other entity have also been sought. ED also wants to know if these entities made further investment with foreign institutional investors (FIIs) registered with Indian regulators to trade in stock markets here.
Also, the directorate has sought basic details on whether Pluri and Brockway Inc maintained accounts with UBS, London, and the instructions on the basis of which funds were transferred.
