India's Reliance in emerging financial fraud case....

A legal battle in London has revealed that a conglomerate controlled by Anil Ambani, the Indian telecoms tycoon, used a Mauritius-based fund to make covert investments in one of its own companies, triggering calls in India for a full investigation.


UK regulators have found that Mr Ambani’s Reliance Group, spanning interests from financial services to infrastructure, invested $250m in the offshore fund that in 2007 bought securities linked to one of the companies within the group, in violation of Indian law.

The complex chain of investments, long the subject of media speculation in India, is now at the centre of a disciplinary action brought by the UK’s Financial Services Authority against the former private bankers at UBS who set up the investment fund.

The long-running case has already established serious compliance failings at UBS, the Swiss bank whose flagship wealth management arm competes fiercely for the business of billionaires such as Mr Ambani. The bank paid an £8m fine in 2009 for control weaknesses on its “Asia II” private banking desk based in London, which dealt with “mega clients” such as Mr Ambani and several other Indian tycoons.

So far, only Mr Ambani’s group has been publicly identified as using this structure. But one Indian investor with knowledge of the vehicle claimed that as many as 25 Indian businessmen had used similar funds.