Bank of Baroda case: ED gets 4-day custody to quiz arrested personsOctober 13, 2015
Enforcement Directorate (ED) was today allowed by a Delhi court to quiz in its custody four persons, including an HDFC bank employee, arrested on alleged money laundering charges in Rs 6,000 crore remittances case at a Bank of Baroda (BoB) branch here.
Accused Kamal Kalra, working with the HDFC Bank’s foreign exchange division, Chandan Bhatia, Gurucharan Singh Dhawan and Sanjay Aggarwal were produced before Metropolitan Magistrate Viplav Dabas where ED’s special prosecutor N K Matta moved a plea seeking their custodial interrogation for 14 days.
ED said custodial interrogation of these accused, who were arrested today, was required for recovering Rs 6,000 crore of “advance import remittances made through 59 newely opened current accounts without ensuring compliance of banks guidelines/KYC and ascertaining heavy cash receipts made in newely opened current accounts and concealment of proceeds by the accused.”
Matta said questioning of these accused was required for ascertaining beneficiary of forex transactions with incorrect exchange rates on many occasions by them and for identifying the other beneficiaries.
ED also said they have to ascertain “the failure of Bank of Baroda to exercise due diligence while making remittances for imports as credit reports of suppliers was not found to have been obtained timely.”
“It is apparent from the record brought by investigating officer that the proceeds of crime involved in this case are more than Rs 6,000 crores. It is also clear that detailed interrogation and investigation is required to unearth the complex modus operandi and roots of the syndicate involved in the crime,” the court noted in its order.
“Considering the present facts and circumstances, this court deems it fit to remand the accused persons to custody of ED for a period of four days for ascertaining the trail of money as laundered as proceeds of crime, for recovering the huge amount of Rs 6,000 crores as well as to ascertain the involvement of other associates involved in laundering the proceeds of crime,” the judge said while sending them to ED’s custody till October 17.
ED arrested the four accused today while calling it a case of trade-based money laundering where accused traders evade custom duties and taxes to generate slush funds.
According to ED sources, all the accused were alleged middlemen for at least 15 fake companies, out of the total 59 which were involved in perpetrating the economic crime unearthed recently and also being probed by the CBI.
They have been arrested for the alleged offences under the provision of the Prevention of Money Laundering Act (PMLA).
CBI arrests BoB AGM, forex ops chief
An assistant general manager and head of the foreign exchange division of Bank of Baroda (BoB) were today arrested by CBI in the Rs 6,000 crore suspicious remittances case executed through one of the bank’s branches in the national capital.
The agency said it arrested AGM S K Garg and Jainish Dubey, who headed the Foreign Exchange division at BoB’s branch in Ashok Vihar here, under various provisions of the IPC and the Prevention of Corruption Act.
The alleged irregularities had come to notice recently and the agency had conducted searches on the bank premises and residences of Garg and Dubey last week.
The CBI FIR had alleged that “59 current account holders and unknown bank officials conspired to send overseas remittances, mostly to Hong Kong, of foreign exchange worth approximately Rs 6,000 crore in illegal and irregular manner in violation of established banking norms under the garb of payments towards suspected non-existent imports”.
CBI sources had said these remittances were sent by splitting them into amounts below one lakh USD to avoid automatic detection by software used by banks to alert them about such transactions.
The Enforcement Directorate too is probing the case and had participated in the searches conducted by CBI.
CBI sources had found that the Ashok Vihar branch of the bank was a relatively new one which had got the permission to entertain forex transactions only in 2013.
CBI found that an estimated Rs 6,000 crore was transferred through nearly 8,000 transactions done between July, 2014 and July, 2015.
BoB laundering case: HDFC official among 4 arrested by ED
Four persons, including an HDFC bank employee, were today arrested by Enforcement Directorate (ED) under money laundering charges in the Rs 6,000 crore suspicious remittances case at a Bank of Baroda (BoB) branch in the national capital.
Calling it a case of trade-based money laundering, where accused traders evade custom duties and taxes to generate slush funds, the agency arrested Kamal Kalra, working with the foreign exchange division of HDFC bank, Chandan Bhatia, Gurucharan Singh Dhawan and Sanjay Aggarwal after marathon questioning at its office here.
Emails sent to HDFC bank for its reaction did not elicit a response.
All the accused, ED sources said, were alleged middlemen for at least 15 fake companies, out of the total 59 which were involved in the perpetrating of the economic crime unearthed recently and also being probed by the CBI.
Sources said the four allegedly connived with each other in “forming” fake companies and business entities in Hong Kong by “over valuing” the export value and subsequently claiming duty drawbacks.
While ED investigations under the Prevention of Money Laundering Act (PMLA) claimed that the HDFC employee was allegedly helping Bhatia and Aggarwal for remitting the amount through BoB against a commission of 30-50 paise per US dollar remitted abroad, Bhatia was allegedly instrumental in forming the companies in India and used to remit money to companies based at Hong Kong and was working with Dhawan, an exporter of readymade garments.
They alleged Aggarwal was successful in sending tainted foreign remittances worth Rs 430 crore through the BoB branch in Ashok Vihar in a short span of time.
Sources said more arrests of similar middlemen and other operatives, including BoB employees, could take place in the near future.
The agency is also probing the case for forex contraventions under the Foreign Exchange Management Act (FEMA).
The agency said BoB yesterday informed it that “the total amount deposited in the 59 accounts is Rs 5,151 crore and only 6.66 per cent (Rs 343 crore) of this amount has been deposited in cash in the bank while remaining amount of Rs 4,808 crore came through other banking channels.” .
The agency said Dhawan allegedly obtained “duty drawback to the tune of Rs 15 crore in a short period of 6-7 months” and was in the process of putting in similar applications before the act was caught.
ED is now investigating further to check the activities of the remaining suspected 44 fake firms which pumped in money to overseas locations in a similar manner.
ED sleuths had participated in a search operations conducted on accused BoB executives last week and had seized a number of documents.
New BoB chief says external agency to probe scams
P S Jayakumar, who today took charge as the MD and CEO of the scam-hit Bank of Baroda (BoB), said he will soon hire an external accounting agency to identify factors that led to the Rs 6,175-crore alleged forex scam and the Rs 350-crore bill discounting fraud at its two branches.
“We will be appointing an external accounting firm to see what missed our eyes such as KYC (know-your-customer) issues that led to these alleged scams,” Jayakumar, a former Citibanker, told reporters here today after assuming charge.
He also said that by next week, the bank will present a report to its audit committee detailing developments relating to the forex transactions that are being investigated by CBI and the Enforcement Directorate.
“We attach a very high level of seriousness to the (corruption) issue. My goal is to work with the team and get the details,” Jayakumar said, adding that “we have to make appropriate changes in our system and train people accordingly so that such things do not happen again”.
On possible measures the bank will take internally, he said, “Over the next one week, we will submit a proper plan to the audit committee on the matter… we have to make appropriate changes to the processes, structure and training so that a repeat of such instance doesn’t happen.”
Prior to this, Jayakumar worked with the private sector.
BoB had remained headless for the past 14 months. The government had earlier appointed former chairman of Microsoft India Ravi Venkatesan as the bank’s non-executive Chairman.
On long-to-medium term plans, Jayakumar said, “Over the next 90 days, we plan to draw up our future plan where we will articulate what we are going to do. This will coincide with the third quarter results.”
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