Six arrested in Bank of Baroda money-laundering case

New Delhi, October 13

Six persons, including an assistant general manager and head of the foreign exchange division of Bank of Baroda (BoB) and an HDFC bank employee, were today arrested in connection with the Rs 6,000-crore suspicious remittances case at a BoB branch in the national capital.

Four arrests were made by the Enforcement Directorate (ED) and two by the Central Bureau of Investigation (CBI).

Calling it a case of trade-based money laundering, where accused traders evade custom duties and taxes to generate slush funds, the ED 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.

CBI arrests BoB AGM, forex ops chief

The CBI said it arrested AGM SK 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 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 $1 lakh to avoid automatic detection by software used by banks to alert them about such transactions.

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. — PTI