ED arrests ex-RCOM president Punit Garg in Rs 40,000-crore bank ‘fraud’ case

The Enforcement Directorate on Friday said it has arrested former Reliance Communications (RCOM) president Punit Garg on money-laundering charges in an alleged Rs 40,000 crore bank loan fraud against group companies of businessman Anil Ambani.

Garg was taken into custody on Thursday. A special Prevention of Money Laundering Act (PMLA) court in Delhi sent him to nine days of ED custody, the federal probe agency said in a statement.

Garg, ex-president and director of Reliance Communications Limited (RCOM), was arrested in connection with an ongoing investigation linked to an alleged over Rs 40,000 crore bank fraud and money laundering by RCOM and its group entities, the ED said.

There was no immediate comment from the Reliance Group on this development. The agency, on Wednesday, had said it had attached shares and mutual funds in the name of Garg’s wife.

It has been found that Proceeds of Crime were diverted through multiple foreign subsidiaries and offshore entities of RCOM. In particular, it was found that Proceeds of Crime were diverted for the purchase of a luxury condominium apartment in Manhattan, New York, United States of America (USA).

This property was sold during the Corporate Insolvency Resolution Process (CIRP) of RCOM fraudulently by Punit Garg. The sale proceeds of US$ 8.3 million were remitted from the USA under the guise of a sham investment arrangement with a Dubai-based entity controlled by a Pakistan-linked individual, without the knowledge or consent of the Resolution Professional.

“The investigation has further revealed that part of the Proceeds of Crime – public money taken by RCOM as bank loans – was diverted for Punit Garg’s personal expenses, including overseas education-related payments of his children.” the ED claimed.

The alleged laundered funds were “diverted” through multiple foreign subsidiaries and offshore entities of RCOM, it claimed.