The Industrial & Commercial Bank of China Ltd., China Development Bank and the Export-Import Bank of China (Chinese Banks) have dragged Asia’s Richest man brother, Anil Dhirubhai Ambani to London court for his default of not paying back the loan amount of $680 million.
ICBC lawyer told the court that $925.2 million loans were given to Reliance Communications Ltd which, Anil Ambani’s firm in the year 2012 on the condition that he will provide a personal guarantee. He added the firm made some payments, however, in 2017 they defaulted if paying the money.
However, Anil, on the contrary, said that though he has agreed for a non-binding “personal comfort letter,” but he never guaranteed to ties his assets which is an “extraordinary potential personal liability.”
Anil Ambani and his downfall
Earlier this year, Reliance Communications administration fell of which Anil Ambani was the chairman. His empire of telecommunication and infrastructure, i.e., Reliance Group has in recent past faced a lot of struggle of enormous debt. As per July 2019, his biggest units were under a debt of roundabout 939 billion (excluding phone company).
In this year itself, he was threatened by Supreme Court to be put to prison as his company Reliance Communications failed to pay Ericsson AB’s Indian unit 5.5 billion rupees. He was given a month time to clear his dues, which was later paid by his brother Mukesh Ambani
Since the demise of their father, the relation between the brothers were sour. On the one hand, Mukesh’s oil and petrochemicals businesses grew, whereas Anil’s assets fell.
The story of brother behind $680 Million Loan
In the year 2011, Anil went to Beijing to negotiate about the loan with ICBC’s former Chairman Jiang Jianqing. Credit was given on share pledge, but the current dispute revolves around whether Anil Ambani or any of his officials have given a personal guarantee as security.
It is alleged that Reliance’s commercial and treasury head, Hasit Shukla, has on behalf of Anil Ambani by power of attorney had signed a personal guarantee when the loan was given seven years ago. However, Ambani lawyer claims that Hasit never had the authority of signing on behalf of Ambani, which makes personal guarantee non-binding.
In the case in hand, Industrial & Commercial Bank of China Ltd. is the only claimant and is representing the other two banks (lenders). According to the claimant, the debt is straight forward without any dispute as it was given under good faith and is secured by a personal guarantee given by Anil Ambani.
On Thursday, ICBC’s lawyers have asked the court to give an early ruling or a conditional order requiring Ambani to pay the court the unpaid loan amount along with the Interest under the facility agreement. Whereas, Anil Ambani has refused to give any details of his wealth, according to him the guarantee on which the banks are relying on is not valid, and the claim is without any merit.