London: The brother of Asia’s richest man was ordered to set aside $100 million in his dispute with three Chinese banks, even as he pleaded poverty.
“The value of my investments has collapsed,” Anil Ambani said, according to a London court filing by banks seeking around $700 million in defaulted loans. “My net worth is zero after taking into account my liabilities. In summary, I do not hold any meaningful assets which can be liquidated for the purposes of these proceedings.”
The lawsuit was filed by three state-controlled Chinese banks, which argue that they provided a loan of $925 million to Ambani’s Reliance Communications Ltd. in 2012 with the condition that he personally guarantee the debt. Ambani’s comments were disclosed as he tried to avoid depositing hundreds of millions of dollars with the court ahead of a trial.
On Friday evening, Judge David Waksman ordered Ambani to put up $100 million into the court’s account within six weeks. Ambani plans to appeal.
The embattled Indian tycoon 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 60-year-old is the brother of Mukesh Ambani, who’s worth $56.5 billion and is the wealthiest man in Asia. Anil, on the other hand, has seen his personal fortune dwindle over recent years, losing his billionaire status. His Reliance Communications filed for bankruptcy last year.
Anil has “clearly got more assets and income than he’s letting on,” the judge said. “What I’m dealing with is an extraordinarily wealthy family who have helped each other in the past.” Waksman said he didn’t believe that Ambani’s family “have firmly and irrevocably brought the shutters down.”
Ambani’s lawyer, Robert Howe, had argued that the court shouldn’t order his client to make a payment he can’t cover. The tycoon argues that that an order requiring him to do so would hinder his ability to defend himself in the case, Howe said.
“Mr. Ambani is reviewing the order of the U.K court and will take legal advice as to further remedies in appeal,” representatives for Ambani’s Reliance Group said.
Also read: Most countries don’t know how much they owe China — and it’s a lot
Bankim Thanki, an attorney representing Industrial & Commercial Bank of China Ltd., China Development Bank and the Export-Import Bank of China, said in a filing that Ambani’s statements are “plainly a yet further opportunistic attempt to evade his financial obligations to the lenders.”
“We hope that Mr. Ambani will comply with the court’s order and look forward to the swift resolution of the case at trial,” the banks said in a statement.
Ambani was caught up in another legal wrangle last year, when India’s Supreme Court threatened him with prison after Reliance Communications failed to pay to pay 5.5 billion rupees ($77 million) to Ericsson AB’s Indian unit. The judges gave him a month to find the funds, and his brother, Mukesh, stepped in just in time to make the payment.
The brothers’ relationship has been fraught since their father’s death left behind a vast empire that was split between them. While Mukesh’s oil and petrochemicals businesses have flourished, Anil’s assets dwindled.
Anil said in a filing that he recognized that the judge would want to know if he could satisfy any order to put up funds from outside resources, including his family.
“I can confirm that I have made enquiries but I am unable to raise any finance from external sources,” he said.
Waksman had said in an earlier ruling that he believed Ambani’s defense would be shown to be “opportunistic and false.”
Ambani’s lawyer told the judge that as a result of the comments the tycoon’s relatives were unlikely to lend any funds.
There is a “very substantial risk they will never get it back,” Howe said.
“The order pertains to an alleged personal liability of Mr. Ambani and will have no bearing on the operations of the Reliance Infrastructure Ltd., Reliance Power Ltd. and Reliance Capital Ltd.,” Ambani’s representatives said. – Bloomberg
Also read: China has edge over Silicon Valley to end banking as we know it