Three Chinese banks – Industrial & Commercial Bank of China Ltd. (ICBC), Export-Import Bank of China and the China Development Bank – have filed a lawsuit against Ambani for default on a loan amounting to $925 mn given to now-bankrupt Reliance Communication (RCom). Although RCom had paid a part of the loan, it defaulted early 2017. $680 million are still due.
The London Bank Judge, David Waksman asked Anil Ambani to deposit $100 million to the bank’s account within six weeks. Anil Ambani and his defense team lead, Harish Salve pleaded the court to not ask Mr. Ambani to cover the amount he cannot pay. His lawyer, Robert Howe said that the payment would be an obstacle to his efficiency of defending himself.
The current value of my shareholdings is down to approximately $82.4 million and 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. – Anil Ambani
However, the Chinese Banks did not believe this. They contradicted the opposing lawyers’ arguments by pointing out Ambani’s sumptuous lifestyle and assets that he owns. Mr. Anil and his lawyers argued that the assets belonged to the company.
Chinese banks said that Ambani had given a ‘personal guarantee’ for the loan, while Ambani responded that he only offered a ‘personal comfort letter’ and not an ‘extraordinary potential personal liability’ that might have required Ambani to liquidate his personal assets to pay off the debt.
ICBC’s lawyer Bankim Thanki had commented that Ambani’s argument was an opportunistic one and that it was an ‘attempt to evade his financial obligations’. He also pointed out his luxurious fleet of cars and his $56 million luxurious yacht as a ‘dichotomy’ of his poverty plea. He also asked how was he able to afford such expensive legal care. Ambani and his lawyers are planning to appeal the court’s order.
Brother at Rescue
Anil Ambani is the brother of Asia’s richest man, Mukesh Ambani, whose net worth more than $50 bn. Anil Ambani was involved in another financial scuffle last year. Ericsson AB India demanded payment of INR 550 crores, due from the bankrupt RCom. RCom had filed for bankruptcy in 2019. Supreme Court had said Anil Ambani that if he failed to pay the dues he will be imprisoned. Brother Mukesh Ambani had stepped in at the eleventh hour and resolved the matter by paying off the debt.
However, in the plea against the London Court, Anil Ambani said that he would not be able to make arrangements from outside or from relatives, including his billionaire brother Mukesh Ambani.
From Riches to Rags
Anil Ambani, now caught up in a debt spiral, held $42 bn worth in 2008. The 2G Scandal of 2011 was the beginning of the end for Anil Ambani. After the scandal broke out, his net worth plunged to $8.8 bn.
Derailing Reliance Power affected Anil’s net worth in 2013 and it fell to $5.2 bn. With the telecom market gaining traction in 2016, Anil Ambani’s RCom was unable to match the strides. The hit halved Ambani’s worth to $2.5 bn. In 2019, RCom had filed for bankruptcy, dwindling further Anil’s net worth.