Chinese banks sue Anil Ambani, brother of Asia’s richest man, over US$680 million in unpaid loans
- Indian tycoon’s sibling Mukesh Ambani is worth US$56 billion, but his own personal fortune has dwindled over recent years
- Case centres on whether Anil Ambani gave personal guarantee for loan made to his firm, Reliance Communications
Three Chinese banks are suing the brother of Asia’s richest man in a London court for failing to pay back US$680 million in defaulted loans.
The Industrial and Commercial Bank of China (ICBC), China Development Bank and the Export-Import Bank of China agreed to loan US$925.2 million to Anil Ambani’s firm Reliance Communications in 2012 on condition that he provided a personal guarantee, ICBC’s lawyer Bankim Thanki told the court.
Some repayments were made by the wireless carrier, but in February 2017 it defaulted on its payment obligations.
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 businessman is the brother of Mukesh Ambani, who is worth US$56 billion and is the wealthiest man in Asia and 14th richest in the world. Anil, on the other hand, has seen his personal fortune dwindle over recent years, 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.
Anil Ambani was chairman of Reliance Communications, which fell into administration earlier this year. His wider telecommunications-to-infrastructure empire Reliance Group has continued to struggle under a mountain of debt.
As of July, four of its biggest units, excluding the phone company, had about 939 billion rupees (US$13.2 billion) of debt, Bloomberg reported in September.
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Anil Ambani was caught up in a similar case earlier this year, when India’s Supreme Court threatened him with prison after Reliance Communications failed to pay to pay 5.5 billion rupees to Ericsson AB’s Indian unit. The judges gave him a month to find the funds, and his brother, Mukesh, stepped in 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.
According to a court filing, Anil went to Beijing in the winter of 2011 to negotiate the loan with ICBC’s former chairman, Jiang Jianqing, directly. The lenders sought a share pledge before granting the loans, but the legal dispute centres on whether Ambani or one of his associates went on to provide a personal guarantee as security.
Hasit Shukla, Reliance’s commercial and treasury head, signed a personal guarantee on Ambani’s behalf by power of attorney when the loan was set up seven years ago, Thanki said. But Ambani did not give Shukla the authority to sign for him, making the guarantee non-binding, lawyer Howe said in written submissions.
“Mr Ambani’s position is that the claim made by ICBC in relation to his alleged personal guarantee for loans to RCOM is without merit,” a spokesman for the tycoon said in an email.
Industrial & Commercial Bank is the sole claimant in the London case, and is representing itself and the other two lenders.
“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.
In Thursday’s court hearing, ICBC’s lawyers asked Judge David Waksman for an early ruling or a conditional order requiring Ambani to pay into court the unpaid sum and interest under the facility agreement. Ambani has declined to give any evidence of his wealth, they said.
