Six people arrested in BoB forex fraud case 

Bank’s branch head, forex ops chief among those held

Six persons, including Bank of Baroda’s branch head at Ashok Vihar, New Delhi, and an HDFC Bank employee, were arrested on Tuesday in connection with trade-based mechanism to launder money from the bank’s branch.

BoB on Monday said the total value of illegal remittances through its Ashok Vihar Branch in New Delhi was $546.10 million (Rs 3,500 crore), much lower than Rs 5,151 crore (Rs 51.51 billion) estimated by the Enforcement Directorate and Rs 6,000 crore (Rs 60 billion) by the Central Bureau of Investigation.

CBI arrested BoB’s Ashok Vihar branch head S K Garg and the foreign exchange head of the bank branch, Jainis Dubey, for criminal conspiracy and cheating.

ED, which is jointly probing the case, arrested Kamal Kalra, working with the foreign exchange division of HDFC Bank and three other individuals — Chandan Bhatia, Gurucharan Singh Dhawan and Sanjay Aggarwal (none of them working with  any bank) — after marathon questioning at its office here.

ED said the modus operandi used to launder money involved trade-based mechanism, where accused traders evaded custom duties, taxes and over-claim duty drawbacks to generate slush funds.

Later, a Delhi court permitted ED four-day custody of the four accused for interrogation.

On Tuesday, shares of BoB fell 0.40 per cent at Rs 176.10.

All the accused, ED said in a statement, were alleged middlemen for at least 15 fake companies, out of the total 59 involved in perpetrating the economic crime unearthed recently and also being probed by the CBI.

ED said the four allegedly connived in ‘forming’ fake companies and business entities overseas, particularly in Hong Kong by ‘overvaluing’ the export value and subsequently claiming duty drawbacks.

For this overvaluation, such exporters require forex in the foreign country equivalent to overvaluation.

Similarly, unscrupulous importers, importing items where customs duty is high, undervalue imports in order to save customs duty, and for this purpose, importers also require availability of forex in foreign country to pay the difference.

ED investigations under the Prevention of Money Laundering Act claimed that the HDFC Bank employee was allegedly helping Bhatia and Aggarwal in remitting the amount through BoB against a commission of 30-50 paise per dollar remitted abroad.

Source: Rediff – 6 arrested in BoB forex fraud case

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