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Reliance denies link to $1.2-b money laundering case in Netherlands
International

Reliance denies link to $1.2-b money laundering case in Netherlands

Agency News

In the wake of allegations that Reliance Industries was involved in $1.2-billion money laundering case with the connivance of three Dutch workers, the company has come out with a flat denial.

A Dutch publication, Cobouw, had reported that investigators last week arrested three former employees of a local firm, East West Pipeline Ltd (EWPL), on grounds of laundering $1.2 billion through over-invoicing services and works for a gas pipeline built by Mukesh Ambani's Reliance unit. The three were released after a few days.

Firm EWPL, earlier known as Reliance Gas Transportation Infrastructure Ltd (RGTIL), denied that any money was laundered and clarified that higher the capital cost of a pipeline, the higher would be the gas tariff. Reliance Industries, too, denied any link to EWPL. It said it neither set up any gas pipeline in 2006 nor have contracts with any Netherlands for such a line.

The Fiscal Intelligence and Investigation Service and Economic Investigation Service reportedly arrested the three former employees on grounds that an estimated $1.2 billion in profits earned by the company through over-invoicing were ‘creamed off’ to Singapore-based Biometrix Marketing Ltd, a company it claimed was linked to Reliance.

An AFP report quoting a statement issued by the public prosecutor’s office said the company acted as an “invoice duplicator” to enable the Indian firm to claim costs twice from gas customers. “It is suspected that the Dutch company used to increase the amounts on the invoices for the materials and services supplied,” it said. “The ‘profits’ earned in this way were subsequently creamed off via the Dutch company.”

The gains were then transferred via a complex web of businesses based among others in Dubai, Switzerland and the Caribbean, before eventually ending up at a business owned by the Indian company in Singapore, the report said. The real losers “were probably individual citizens in India” as the cost of production of gas was passed on to the consumer, it added.

EWPL said the pipeline project was built by a privately owned entity, in which promoters’ private funds were invested. “No public funds were invested and all borrowings from banks, financial institutions and others have been fully repaid by the promoters. We strongly deny any suggestion of any money having been laundered at any stage during the implementation of the project,” it said in a statement.

RIL said in a statement that neither it nor any of its subsidiaries set up any gas pipeline in 2006. Also, it never had any contracts with any Dutch company for setting up of any gas pipeline and hence the report could not relate to Reliance Industries. “RIL has always complied with all rules, regulations and applicable laws and any suggestion of impropriety by RIL is emphatically denied.”