Judge wonders why CBI did not probe bank directors in fraud case

The XIth Additional Special Judge for Central Bureau of Investigation cases K. Venkatasamy has expressed concern over the progress of investigation into a fraud in which Andhra Bank suffered losses to the tune of ₹114.33 crore.

Wondering why the investigating agency had not arrested or examined the bank directors, who sanctioned the loan without obtaining collateral security, the judge said such lapses could pave the way for more financial frauds. It also appeared that banks had a tendency to favour corporate borrowers when it came to complying with collateral security norms.

The case relates to an alleged scam involving Zylog Systems (India) Ltd represented by Sudarshan Venkatraman, Ramanujam Sesharatnam, Srikanth and others. The complaint of Andhra Bank is that the accused defrauded the bank causing a loss of ₹114.33 crore. They took the loan for the purpose of installing WiFi towers, but indulged in cheating and criminal misappropriation of funds.

Based on a complaint preferred by the bank on March 14, 2016, the CBI’s Bank Securities and Fraud Cell, Bengaluru, registered a case. During the course of investigation it came to light that the accused were involved in four cases of bank frauds to the extent of ₹740 crore.

Dismissing the bail petitions of the first two accused in the case, Mr. Venkatasamy said even one year after registering the case, the CBI had not arrested or examined the bank directors, who sanctioned the loan without ensuring proper collateral security. If enlarged on bail, the accused might attempt to tamper with evidence or influence witnesses. Since the two were US nationals, there was a possibility that they could flee to their country, the judge said referring to objections raised by the CBI counsel.