Investigations into the alleged fraudulent overseas remittances totalling Rs. 5,100 crore through the Bank of Baroda are now focussed on finding out if big names are involved. Six persons, including two officials of the Bank of Baroda and one of HDFC Bank, were arrested by the Enforcement Directorate and the Central Bureau of Investigation on Tuesday.
The Serious Fraud Investigation Office is also holding an investigation, and a departmental inquiry has been initiated, top sources told The Hindu . “Investigations so far point to collusion with bank employees,” a source said.
He said the racket adopted a modus operandi by which exporters sold their goods to conduits, instead of to end-buyers, at inflated prices. The middlemen then sold the goods to the end-buyers at genuine prices. The exporters were thus able to benefit from the government’s drawback duty incentive at the inflated prices.
But the conduits ran up deficits equal to the difference between the inflated prices at which they received the goods from the exporters and the prices at which they sold then to the end-buyers.
To make good the deficits, the exporters distributed the excess amount into multiple accounts as small deposits from where the sums were routed through the banking system to accounts of shell companies. These shell companies then made remittances back to the conduits, booking them as advance payments for imports. The imports, however, remained only on paper as the shell companies were closed down within months to evade detection.
At the Ashok Vihar branch of BoB, where the two investigation agencies conducted searches on Saturday, 59 accounts of alleged shell companies have been found.
The CBI arrested Ashok Vihar branch’s Assistant General Manager S.K. Garg and Foreign Exchange in-charge Jainish Dubey for allegedly facilitating the remittances. The ED arrested Kamal Kalra, Chandan Bhatia, Gurucharan Singh Dhawan and Sanjay Aggarwal on money-laundering charges.
“No loss was caused to the bank. On the contrary, it gained from increase in business. The amount deposited in the 59 current bank accounts under scrutiny was Rs. 5,151 crore, of which Rs. 343 crore was deposited in cash and the remaining came through other banks,” a senior ED official said.
One of the accused who works with the forex division of HDFC Bank allegedly handled 12 of the 59 shell companies, all of which had opened current accounts at the BoB branch.
An ED source said Chandan Bhatia charged 30-50 paise per dollar remitted abroad and was instrumental in floating firms in Hong Kong that acted as conduits.
