SEBI rejects Anil Ambani settlement request over Reliance Infrastructure

India’s Securities and Exchange Board of India (SEBI) has rejected settlement applications filed by industrialist Anil Ambani and his corporate group over allegations of misusing company funds worth 65.26 billion rupees (about $691 million), according to documents reviewed by Reuters.

The regulator rejected the applications last week, alleging that Ambani and Reliance Infrastructure were involved in improperly routing the funds to entities linked to the company’s controlling shareholder, Ambani.

The documents reviewed by Reuters show that SEBI alleged in September that the transactions involving Ambani and Reliance Infrastructure were a “mis-utilisation of company funds”, as they could potentially be for personal enrichment rather than serving a corporate purpose for public shareholders.

Ambani, the younger brother of billionaire Mukesh Ambani, has come under increasing scrutiny from regulators and enforcement agencies over the past 18 months.

Several executives of his group have been arrested on fraud charges, while some of his properties have been frozen. The executives have denied wrongdoing, and the cases remain pending before the courts.

Responding to Reuters, a spokesperson for the Anil Ambani group was quoted saying in an email: “The allegations are categorically denied. The matters are sub judice, and the Group will continue to defend its position as legally advised.”

SEBI did not respond to Reuters’ request for comment.

The regulator’s decision to reject the settlement applications, along with the detailed allegations, has not been reported previously. Reliance Infrastructure had disclosed in an October stock exchange filing that SEBI alleged violations relating to its financial exposure to a connected entity, without providing further details.

According to the documents reviewed by Reuters, SEBI rejected the settlement applications citing parallel investigations by other Indian enforcement agencies, including financial crime and fraud investigators.

This is the second time SEBI has rejected a settlement application from Ambani. Last year, it rejected his plea in a separate case linked to investments in Yes Bank.

Under SEBI’s settlement mechanism, companies can resolve cases by paying a penalty without admitting wrongdoing.

If a settlement request is rejected, the regulator generally issues a detailed public order outlining the alleged violations, which could result in monetary penalties or restrictions on access to capital markets. Such orders can be challenged in court.

Reliance Infrastructure is planning a public fund-raising exercise after its board approved raising up to 30 billion rupees.

The company had earlier disclosed an exposure of about 65.26 billion rupees to engineering contractor CLE Private Ltd, describing it as an independent entity.

However, SEBI alleged that Reliance Infrastructure diverted 176.7 billion rupees (about $1.9 billion) to CLE, which subsequently invested at least 112 billion rupees in companies linked to the Ambani-led Reliance ADA Group over a decade through 2024.

According to the documents reviewed by Reuters, SEBI concluded that, rather than being independent, “for all practical purposes, CLE functioned as a Reliance ADA Group company” that was “indirectly controlled” by Ambani and a few other officials.

An email sent by Reuters seeking comment from CLE at its last recorded address in India’s company registry was not immediately answered on Friday.