Reliance Power CFO Arrested by ED in Rs 68 Crore Bank Guarantee Fraud Investigation

Ashok Kumar Pal was detained by the Enforcement Directorate following extensive questioning sessions on Friday night.

New Delhi:

The Enforcement Directorate (ED) has apprehended Ashok Kumar Pal, who serves as Executive Director and Chief Financial Officer of Reliance Power Limited, regarding a money laundering investigation connected to an alleged fraudulent bank guarantee worth Rs 68 crore. This arrest relates to a financial investigation that has already significantly impacted the Anil Ambani-led Reliance Group, causing their stock values to decline dramatically across markets this week.

After being taken into custody late Friday following hours of questioning, Pal appeared before a special PMLA court in Delhi where he was placed in two days' judicial custody. The court has scheduled its decision regarding further remand for October 18.

The ED is conducting its investigation under the Prevention of Money Laundering Act (PMLA), following an FIR registered by the Delhi Police's Economic Offences Wing (EOW) last November. According to the FIR, a Reliance Power subsidiary allegedly submitted a counterfeit bank guarantee to the Solar Energy Corporation of India (SECI), a public sector enterprise, to secure a battery storage tender.

Investigators claim the guarantee, supposedly issued by FirstRand Bank in Manila, was fraudulent since the bank does not operate any branches in the Philippines. The ED alleges that Pal played a "crucial role" in facilitating and approving documents submitted to SECI through unofficial communication channels such as Telegram and WhatsApp, circumventing the company's standard internal workflow protocols.

Reliance Power announced that Pal had "demitted the office of Executive Director and CFO with immediate effect" while the investigation proceeds.

The company maintains its position as "a victim of fraud, forgery, and cheating conspiracy to cheat," asserting that the allegedly fake guarantee was arranged by a third party without their knowledge.

Reliance Power referenced earlier complaints filed with the Delhi Police's EOW in October 2024, which led to a criminal case initiated on November 11, 2024, against Odisha-based Biswal Tradelink, the company accused of creating the forged bank documents.

"We refer to our disclosures dated November 7 and 14, 2024, whereby we informed that the company had lodged a complaint regarding a fake endorsement of bank guarantee against EMD (issued by a foreign bank) arranged by a third party," stated the company filing.

Reliance Power further emphasized that both the company and its subsidiaries had acted in good faith, and reiterated that Chairman Anil Ambani has not served on the company's board for more than three and a half years and "is not concerned with this matter in any manner."

This arrest follows a major ED operation in July, when searches were conducted at 35 locations connected to Reliance Group companies, encompassing over 50 firms and 25 individuals. According to officials, that operation was based on intelligence received from multiple regulatory bodies, including the National Housing Bank, SEBI, the National Financial Reporting Authority (NFRA), and Bank of Baroda.