SEBI Fines Anil Ambani & Other ADAG company Director Rs. 50 Crore

For this news, I would really like to congratulate Mr. CB Bhave, the SEBI Chairman. Congratulations for the tough stand he (representing SEBI) has taken against the owners of business conglomerate like ADAG for their wrong doing.

And this massive amount of fine (Rs. 500 million or 11.11 million USD) will serve as an example to all market participants and remind everybody that there exits a watchdog!!

It was taken for granted by many big business houses (in conjunction with political members) that they can bend the rules as and when they want & get away with it. SEBI has ignored the size & reach of the company and showed that Rules are rules & they apply to all.

The securities market regulator of India, SEBI has initiated & carried out a thorough interrogation of Anil Ambani & group companies' actions since 2007. As these investigations revealed, Anil Ambani along with others raised money through foreign markets as debt for RNRL (in the name of corporation), instead, used this money to invest into stock market in India (for personal gains).

The story does not end here. In the financial reports of ADAG companies specifically Reliance Infrastructure & Reliance Natural Resource Ltd (RNRL) had misrepresented financial information (specifically: the number & nature of investments declared in Financial Statements) since 2007.

SEBI has also directed
- these companies to debar PwC from carrying out Audits of these companies & keep rotating the auditors
- Anil Ambani & other directors refrain from participating in securities market
- Allowed these 'companies' to carry out normal activities related to securities market (tried protecting investors....)

What is even worse,

• Mr. Anil Ambani calls for a press conference & declares that this amount Rs. 50 Crore i.e. approx 11.12 million USD is voluntary & will not have any additional burden on respective companies! Boss, pls stop fooling around!
• And that he claimed that such irregularities happens in almost all big business & gave example of Goldman Sachs. Mr. A Ambani, it's not any good way of defending your wrongdoing.
  
• And that Nira Radia tapes, if you have got to read the conversation between Mr. Tata & Ms. Radia: who talks about Mr. Anil Ambani, the very next moment you will realize why & 'what about' Mr. Anil Ambani had to call for a press conference.

I posted a blog entry (in Marathi) in July 2008, where it was highlighted how, Customs Department of India fined Mr. Anil Ambani for misrepresenting facts of chartering airplanes & tried to evade tax against the equivalent amount of approx Rs. 1000 Cr.

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Btw off-context: I got an opportunity to meet Mr. CB Bhave in my college when he visited IIMB to deliver a lecture. It was just couple of weeks before, he was appointed as a SEBI Chairman. He appeared to be cool headed and composed.

-:Dhan