The Directorate of Enforcement (ED) has seized assets worth ₹54.82 crore belonging to M/s Reliance Infrastructure Limited (R-Infra) under Section 37A of the Foreign Exchange Management Act (FEMA), 1999.
The seized assets include 13 bank accounts of the company. The action was taken for contraventions under Section 4 of FEMA, which pertains to unauthorized transfer or holding of foreign exchange or assets abroad.
The seizure follows findings by the ED’s Special Task Force, Headquarters, indicating large-scale diversion of public funds from government infrastructure projects.
Probe Reveals Diversion of NHAI Project Funds
According to the ED, Reliance Infrastructure Limited allegedly diverted funds from highway construction projects awarded by the National Highways Authority of India (NHAI).
The company, through its Special Purpose Vehicles (SPVs), is accused of siphoning off public money meant for project execution. Investigators found that the funds were routed through sham sub-contracting arrangements to shell companies based in Mumbai.
These shell firms were created using dummy directors and established in coordination with specific bank branches, enabling the layering and concealment of transactions.
Shell Firms Used to Launder Money Abroad
The ED’s investigation found that after being transferred to shell entities, the diverted funds were layered through multiple accounts and subsequently remitted outside India to entities in the UAE.
The remittances were made under the guise of diamond imports — both polished and unpolished — without any actual import of goods or supporting documentation.
The recipient UAE-based companies were found to maintain bank accounts in both the UAE and Hong Kong, and were allegedly controlled by individuals involved in illegal international hawala operations.
According to the agency, these shell entities were linked to hawala transactions exceeding ₹600 crore, suggesting a wider network of cross-border financial manipulation.
Financial Stress and NPA Impact
The ED stated that the diversion of project funds led to severe financial strain on the affected SPVs, causing their bank loans to turn into Non-Performing Assets (NPAs).
This resulted in losses to banks and other lenders, undermining the financial stability of the projects and jeopardizing public financial interests.
Officials added that the systematic misappropriation of public funds not only violated FEMA provisions but also compromised national infrastructure development efforts.
FEMA Action Marks Major Step in Probe
The seizure under Section 37A of FEMA allows the ED to confiscate equivalent domestic assets of an entity found to have held or transferred foreign assets in contravention of the law.
The action against Reliance Infrastructure marks one of the largest FEMA-related seizures linked to infrastructure financing fraud and cross-border fund diversion.
ED officials said that the evidence collected so far points to a coordinated corporate-hawala network, operating through multiple shell companies to channel funds abroad under false trade pretenses.
Further Investigation Underway
The ED confirmed that further investigation is in progress to identify the beneficiaries and intermediaries involved in the fund diversion and to trace the ultimate destination of the overseas remittances.
Authorities are also examining whether related group entities or officials played any role in facilitating the transactions.
Officials emphasized that the agency remains committed to curbing illicit foreign exchange activities and ensuring that public funds are not misused through complex corporate and offshore structures.
