NEW DELHI: The Enforcement Directorate and CBI have arrested six people in connection with alleged illegal remittances amounting to Rs 6000 crore from a branch of state-run Bank of Baroda in the capital. While CBI arrested two bank officials, the ED arrested four persons, including an HDFC Bank employee, on charges of money laundering.
Days after conducting raids, the CBI arrested AGM rank official S K Garg and Jainish Dubey, who headed the foreign exchange division at the bank’s Ashok Vihar branch. The two officials allegedly facilitated opening of accounts and transfer of money to Hong Kong. They have been booked for criminal conspiracy, cheating and under provisions of the Prevention of Corruption Act.
“It is a case of trade-based money laundering where several modules were engaged in registration of shell companies abroad and in Delhi and indulged in fake import and exports,” said Karnal Singh, ED’s acting director.
Singh told TOI more arrests are likely in the case as the agency is still investigating other modules. A press note said some of the alleged exporters had been using the banking channel for more than a decade to make illegal remittances abroad.
Those arrested by ED include Kamal Kalra, working with the foreign exchange division of HDFC bank, besides alleged middlemen for at least 15 shell companies–Chandan Bhatia, Gurucharan Singh Dhawan and Sanjay Aggarwal. These middlemen were involved in registration of shell companies, making huge foreign remittances and raising fake customs invoices to gain from duty drawback.
The ED is trying to crack other modules behind the illegal forex remittances through banking channel. The alleged racket busted by ED and the CBI involves at least 59 companies. A joint team of the two agencies had earlier searched the premises of Bank of Baroda’s branch and residences of the accused.
Singh said ED had received a complaint on September 24 from Bank of Baroda about the internal enquiry being conducted by the management on the allegation of irregular foreign advance remittances to the tune of Rs 6,000 crore to Hong Kong and Dubai in lieu of proposed imports which subsequently did not take place.
ED officials had soon detained some of the accused for questioning and registered a case under the Foreign Exchange Management Act, 1999 (FEMA). Subsequently when CBI registered an FIR, the ED filed a case under provisions of Prevention of Money Laundering Act.
“Interrogation of some of the accused revealed that some export firms took help of entry operators who provided fake purchase invoices to the tune of three to four times of the actual value of the goods. Payment is made through banking channels to the entry operators and is taken back by exporter in cash, thereby converting white money into black,” an investigating officer said.
The entry operators also helped these alleged shell companies transfer money to foreign destinations through banking channels. The money in the alleged case was remitted to Hong Kong and Dubai. The amount transferred to foreign bank accounts was always less than one lakh dollars to avoid any suspicion by investigative agencies. The bills of entries to prove imports were never submitted and the shell companies in India were closed within six months.
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”.