The details emerged in a case brought by Britain's financial regulator, the Financial Services Authority, against UBS bankers
An off-shore investment vehicle, called Pleuri, was sought to be set up in Mauritius to help Anil Ambani's ADAG (Anil Dhirubhai Ambani Group) group funnel money to India illegally, a London tribunal has been told.
Two UBS bankers, who were behind the move and have since left the bank, allegedly misled the bank's compliance team claiming that Pleuri was owned by a French couple.
According to the evidence reported to have been produced before the tribunal, Mr. Ambani, described by bank officials as a ‘mega client', was its ultimate owner. It was aimed at helping Mr. Ambani invest in stocks and securities in India bypassing the law which prohibits Indian nationals and companies from investing through foreign institutional investors.
Eventually, the bank refused to approve the structure. The details, reported by The Financial Times on Tuesday, emerged in a case brought by Britain's financial regulator, the Financial Services Authority (FSA), against Sachin Karpe, a former head of UBS's India desk in London. The case flows from a £1.25 million fine FSA imposed on Mr. Karpe and which he is challenging. The other banker involved in the deal cannot be named for legal reasons. According to the FT report, the FSA told the tribunal that “the source of funds (for Pleuri)...was plainly the Ambani family.''
Mr. Karpe's counsel acknowledged that his client ‘enabled' the transaction but denied any wrongdoing.
“(Mr Ambani) asked for a transaction and Sachin Karpe enabled it. The most that can be thrown at (Mr. Karpe's) door was that he probably ought to have told the client that the bank would not deal with him because the transaction was not legal in India,'' he said.
A Reliance official in London declined to comment.
Meanwhile, Mr. Ambani was reported to have reached a settlement with the Securities and Exchange Board of Indian over allegations of violating borrowing rules without admitting liability.