CBI Traps Bank Officers

CBI registers fraud case against former Oriental Bank execs-Hindu Business Line

A case of fraud was on Tuesday registered against three persons, including former senior executives of the Oriental Bank of Commerce (OBC) here, for allegedly trying to cause a loss of about Rs. 3.80 crore to the bank.

CBI officials said that a case has been registered against Rakesh Kumar Gupta, the then deputy general manager of OBC’s Regional Office at Sardarpura, A.K. Sharma, former chief manager of OBC’s Sojati Gate Branch, and Karni Singh, director of antiquity handicrafts.

It is alleged that the two bank officials abused their official position and entered into a criminal conspiracy with Singh for providing cash credit limit of Rs. 3.80 crore between 2009 and 2013 and a term loan of Rs. 2.5 crore against bank norms without checking and evaluating the antecedents of the firm.

“An alleged loss of Rs. 3.80 crore was caused to the bank,” said a release issued by CBI.

Searches were conducted on Tuesday at the residential and official premises of the accused persons at six places: two each in Jodhpur, Haryana’s Gurgaon and Raipur in Chhattisgarh.

The incriminating documents recovered during the searches are being scrutinised, the release added.

http://www.thehindu.com/business/Industry/cbi-registers-fraud-case-against-former-oriental-bank-execs/article6030037.ece

CBI books 2 for cheating govt bodies of Rs 220cr

One of the accused is an employee of Mohammed Fasih, who is in EOW custody for cheating SIES in a similar fixed deposit scam.

The CBI has booked two men for allegedly cheating eight government agencies of Rs 220 crore they had deposited in Dena Bank. 

While one of them is the chief manager of the bank's Malabar Hill branch, the other is an employee of the Showman Group, whose owner Mohammed Fasih is in the Economic Offences Wing's custody for allegedly cheating the South Indian Education Society of Rs 58 crore in a fixed deposit scam. 

Fasih's employee Vimal Barot is alleged to have used fixed deposits of top government agencies like MMRDA, MTDC, APMC, the Mahatma Phule Backward Class Development Corporation and four other organisations to draw loans using cash-credit facility. 

A cash-credit facility is where a customer can withdraw money from the bank against their fixed deposits. The accused helped the government agencies park their surplus cash reserves as fixed deposits at the Malabar Hill branch of Dena Bank, before siphoning off the entire amount. 

On reading about how Fasih had conned SIES, the government agencies got in touch with the banks and were told their funds had been withdrawn. While MMRDA lodged a complaint with the EOW alleging loss of Rs 45 crore, the other agencies approached the CBI's Banking and Securities Fraud Cell. MTDC has lost Rs 70 crores, APMC Rs 40 crore and MPBCDC Rs 45 crore. 

CBI sources said Barot and Dena Bank chief manager Pritam Nagarkar raised fixed deposits worth Rs 256.5 crore from the government organisations. Barot later used the cash-credit facility to siphon off Rs 220 crore by posing as a financial advisor to these agencies. 

The CBI has booked the duo under Sections 419 (impersonation), 467, 468, 471 (cheating and forgery), and 120-B (criminal conspiracy) of the Indian Penal Code and other provisions of the Prevention of Corruption Act. 

While the CBI conducted searches of more than half-a-dozen places on Wednesday, it is yet to arrest either of the accused. CBI spokesperson Kanchan Prasad confirmed the development, adding that the investigation has just begun. The EOW earlier took Fasih into custody for allegedly cheating SIES of Rs 58. Three others from Showman Group are also under arrest.

CBI REGISTERS A CASE AGAINST A CHAIRMAN & MANAGING DIRECTOR OF SYNDICATE BANK AND 11 OTHER PRIVATE PERSONS IN AN ALLEGED BRIBERY MATTER

Press Release New Delhi, 02.08.2014

The Central Bureau of Investigation has registered two cases against Chairman & Managing Director of Syndicate Bank and 11 other private persons including CMD & Directors of two private firms based at Delhi in a bribery case under relevant sections of Prevention of Corruption Act, 1988 and criminal conspiracy.             It is alleged that the said public servant has been indulging into negotiations for illegal gratification directly as well as through middlemen for extending undue favour to private companies by granting sanction to various financial proposals. The private persons on behalf of companies and others allegedly enter into criminal conspiracy and obtain illegal gratification meant for the public servant and further deliver it to the middlemen on behalf of the public servant.             It is further alleged, that in one case, the public servant was directly negotiating with a private company for an illegal gratification of Rs. 50 lakhs in lieu of granting credit extension to the said company as it had defaulted on the payment of loan installments amounting to crores of rupees to the bank. The officials of the said company allegedly agreed to pay the said illegal gratification and the money was transferred to the middlemen who are also relative of the public servant. CBI laid a trap and recovered the illegal gratification of Rs. 50 lakhs on the spot after the said delivery was made.             Searches were conducted at 20 places including office & residence of the public servant and other private persons at Delhi, Bhopal, Mumbai & Bengaluru. During searches incriminating documents related to the case have been recovered. Apart from this, huge cash; jewellery and property documents have been recovered from the residence of the public servant.             Further investigation is continuing. THEN DEPUTY MANAGER OF PUNJAB NATIONAL BANK AND THEN INCOME TAX OFFICER SENTENCED IN SEPARATE CASES FOR POSSESSION OF DISPROPORTIONATE ASSETS Press Release New Delhi, 11.08.2014             The Special Judge, CBI Cases, Rohini Courts, New Delhi has convicted Shri Ravi Kumar Bharti, then Deputy Manager, Punjab National Bank, Shalmar Bagh, Delhi U/s 13(2) r/w 13(1)(e) of PC act 1988 in disproportionate assets case and sentenced him to undergo three years Rigorous Imprisonment with fine of Rs.3,00,000/-. The court has also ordered for forfeiture the amount of disproportionate assets i.e.Rs.15, 75,284/-.             The instant case was registered on 20.07.2010 U/s 13(2) r/w 13(1)(e) of PC Act 1988 against Shri Ravi Kumar Bharti, Deputy Manager, Punjab National Bank, Shalimar Bagh, Delhi for acquiring assets, both immovable and movable, during the period from 01.01.1998 – 30.04.2009 which were disproportionate to the tune of Rs.30,06,548/- against his income of Rs.30,09,565/- from his known source of income.             After completion of investigation, the charge-sheet was filed on 06.07.2012 in the Court of Special Judge, CBI Cases, Rohini Courts, New Delhi U/s 13(2) r/w 13(1) (e) of P.C. Act 1988.             In another case, the Special Judge for CBI cases, Visakhaptnam has convicted Sri Lakimsetty Pulla Rao, the then Income Tax Inspector, Ward-1, Tanuku, West Godavari District (Andhra Pradesh) in a Disproportionate Assets case and sentenced him to undergo three years Simple Imprisonment with fine of Rs.20,000/-. The Special Judge further ordered to confiscate the property of the accused to the extent of disproportionate assets which have already been attached by the court, to the State, after appeal time is over.             The brief allegation of the case is that the accused Sri L. Pulla Rao, the then Income Tax Officer, Ward-1, Tanuku, West Godavari District during the period from 01.01.1995 to 31.10.2002, was in possession of movable & immovable properties in his name and in the names of his family members which were disproportionate to his known sources of income to the tune of Rs.7,05,119/-.             The Trial Court found the accused persons guilty and convicted them Bank frauds are direct attacks on systems and procedures-Deccan Herald C S Krishnamurthy, Aug 13, 2014 : The Central Bureau of Investigation (CBI) recently arrested Syndicate Bank Chairman and Managing Director (CMD), Sudhir Kumar Jain and others for indulging in corruption over extending credit favours.   A report citing Jain, accused of taking Rs 50 lakh bribe, disturbed the conscience of the “faithful and friendly” Manipal-based bank.   The difficulties in the task of detecting internal frauds were realised ages ago.  The problem continues to be difficult and Sudhir Kumar Jain reminds us of that. The sum of Rs 50 lakh seem small given the powers vested in the CMD.  While the list of bank frauds is a long one, one can’t miss out the Ex-Indian Bank CMD M Gopalakrishnan who was sentenced to one-year rigorous imprisonment for allegedly causing a loss of over Rs 30 crore to the bank for approving loans without proper security between 1992-1996, and was subsequently found guilty of conspiracy, criminal breach of trust, misconduct and cheating under various provisions of IPC and Prevention of Corruption Act.   While money and crime are made for each other, this appears only a tip of the iceberg.  A wider net might reveal larger cupboards across more banks.   If the loan is huge, probe if any “consortium” racket is in play. Leading banks like SBI, PNB and others have led the major consortium advances to top borrowers in the country.  Frauds are said to be happening in corporate loans.  Beyond financial losses, fraud has other negative consequences that impact an institution’s reputation, customer loyalty and the confidence of the shareholder. CBI sources reportedly said that Jain “has allegedly taken Rs 50 lakh as bribe from Bhushan Steel for not declaring loans of nearly Rs 100 crore as Non-Performing Assets (NPAs).”   NPA refers to bank loans, where the borrower has failed to make interest or principal payments for 90 days. The share-holders should also wake up.  Jain has apparently taken unfair advantage of his position through manipulation and abuse of privileged data.  He has allegedly given approvals beyond his bounds, for a price.  How safe is it to trust the RBI figures about the NPAs, the virus affecting the banking sector, in the context of willful manipulation of figures?  Are the profits shown in the financials true and correct? Recall the infamous Satyam scam, where the Indian arm of PricewaterCoopers, the statutory auditor was fined US$ 6 m by the US Securities and Exchange Commission  for not following the code of conduct and auditing standards.  Also to be verified is if the internal and external auditors were controlled by the CMD. Why employees defraud? Why do employees defraud? Is it an opportunity or attitude?  The underlining issue that is being troubled is trust, which is believed to be inherent in our nature, and in the operation of banks.  Indeed, higher level officials, motivated by greed, have more power, greater access and less likely to be controlled.   Largely hidden, employee fraud isn’t exactly something banks want to talk about, as they don’t want the public to lose confidence in their institution. It happens, generating huge losses.  Tellers, managers, executives… they all have a chance to embezzle. Banksters, who can be found at every level of an organisation, have the potential to swindle the customers, tarnish the reputation and demoralise good co-workers.  As a few executives have misled from the front, every time a new official takes over is looked upon with suspicion.  Studies have, time and again, identified willful defaults, frauds, mismanagement and misappropriation of funds as primary reasons for the mounting NPAs. Its impact: the whole machinery would be preoccupied with recovery procedures, rather than focusing on expanding business.  I am aware of a dispatch clerk in a public-sector bank, about three decades ago, using two stamped-envelopes separately for the same destination, instead of one.  Despite pleading “oversight”, the management charged him with “negligence and causing extra expenditure for the bank”, and postponed his increment by six months, for the “extra expenditure” of 20 paise. The higher the grade, the harsher must be the punishment.  Else, there is little difference between a juvenile crime and a “qualified executive” crime.  The penalty for the “executive” betrayers should be firm and fair.   Why such stories repeat in PSU banks?  It is possible there is a lack of monitoring of warning signals at state-run banks. Who is to oversee RBI’s vigilance?  Bank’s Board of Directors are expected to select competent executives, effectively supervise the bank’s affairs, adopt and follow sound policies and objectives, avoid self-serving practices and observe banking rules and regulations. Interestingly, there are officers/employee nominees on the Board.  Even their agitation questioning the irregularities of the banking system can be more specific, well-directed, than a touch-and-go exercise.   The need for a code of conduct has recently been echoed by C H Venkatachalam, general secretary, All India Bank Employees’ Association: "It is high time the government frames a set of rules and conduct regulations applicable to EDs (executive directors) and CMDs. It is all the more necessary because banks deal with huge public money and important financial decisions are taken by them.”  Banks should design fraud awareness training programmes for all levels, while the vigilant teams in each bank should be strengthened with the right skills and right officials.  Can we expect the Modi-led government that has promised to establish a system which eliminates the scope for corruption through public awareness and making it transparent? http://www.deccanherald.com/content/425096/bank-frauds-direct-attacks-systems.html