Will Asia's richest man Mukesh Ambani step in once again to save his younger sibling Anil Ambani from the long arm of law? This time the younger Ambani is in trouble with three Chinese bankers who have taken him to a London court over $680-million loan repayment default, media reports say.
The banks are Industrial & Commercial Bank of China Ltd, China Development Bank and the Export-Import Bank of China from whom Anil Ambani's now-defunct Reliance Communications had taken loans of $925.2 million in 2012. The banks had obtained a personal guarantee from the tycoon, ICBC's lawyer Bankim Thanki told the court. The telco made some repayments but it defaulted on its obligations in February 2017.
'Personal comfort letter'
The embattled Anil Ambani, who escaped jail time earlier only because the elder brother came for his rescue, says that while he agreed to give a non-binding "personal comfort letter," he never gave a guarantee tied to his personal assets – an "extraordinary potential personal liability."
The Supreme Court had threatened Anil Ambani with prison for contempt of court after Reliance Communications failed to follow its order to pay Rs 550 crore to Ericsson AB's Indian unit
Mukesh Ambani, whose $56 billion worth makes him the wealthiest Asian and 14th richest in the world, helped Anil Ambani last when the Supreme Court threatened to jail the latter for failure to clear the dues to Swedish telecom equipment maker Ericsson. Anil Ambani, who had $45 billion assets at one time, has seen his personal fortune dwindle over recent years, eventually, losing his billionaire status.
ICBC "failed and continues to fail, to distinguish between Mr Ambani on the one hand, and the company to whom the loans were being extended... on the other," Ambani's lawyer Robert Howe said in a court filing, according to a report on the Economic Times website. Anil Ambani was chairman of Reliance Communications, which went under administration earlier this year. His wider telecommunications-to-infrastructure empire Reliance Group has continued to struggle under debt. As of July, four of its biggest units, excluding the phone company, had run up a debt of Rs 93,900 crore ($13.2 billion), Bloomberg reported in September.
Contempt of court
The Supreme Court had threatened Anil Ambani with prison for contempt of court after Reliance Communications failed to follow its order to pay Rs 550 crore to Ericsson AB's Indian unit. Mukesh Ambani, whose Reliance Industries owns a business empire ranging from petrochemicals to telecom to fashion retail, had to step in to salvage the situation at the last moment.
According to a court filing, Anil Ambani went to Beijing in 2011 to negotiate the loan with ICBC's then-chairman Jiang Jianqing directly. The legal dispute centres on whether a personal guarantee signed by Hasit Shukla, Reliance's commercial & treasury head, binds Ambani to the deal. Ambani's lawyer Robert Howe claims his client did not authorise Shukle to make such a commitment, the written submissions show. "This is a straightforward debt claim to recover outstanding loans made to RCOM in good faith, and secured by a personal guarantee given by Mr Anil Ambani," the banks said in a statement, according to the report.