Expanding the scope of its investigations into the over Rs 6,000-crore alleged forex scam by Bank of Baroda (BoB), the Enforcement Directorate (ED) on Thursday brought eight more banks under its probe. The suspected banks include Oriental Bank of Commerce (OBC), Axis Bank, ICICI Bank, Kotak Mahindra Bank, ING Vysya (now merged with Kotak), Yes Bank, DCB Bank and Dhanlaxmi Bank.
Employees of BoB and HDFC Bank have already been arrested by Central Bureau Investigation (CBI) and the ED in connection with the alleged scam. The Indian Express had on October 15 reported that several banks, other than BoB and HDFC, were under the ED scanner and that exports related to the BoB forex dealings had been traced to Afghanistan.
New developments in the investigation say that the exporters may have faced drug trafficking charges earlier and that exports may have been sent to China.
Investigations have revealed that various modules, comprising of unscrupulous exporters, middlemen and certain bank employees, had been running this forex racket for close to 10 years. On Thursday, the ED claimed to have busted a second module in the case with the arrest of a middleman Manish Jain.
According to the ED, Jain had helped some exporters from Karol Bagh to float shell companies and open accounts in various banks, with their branches spread across Noida and Ghaziabad, to send illegal remittances of about Rs 557 crore abroad in lieu of non-existent imports.
Investigations have also found that the module involved in BoB scam and the one involving eight other banks are linked through a common accused, Sanjay Aggarwal. Already in ED custody, Aggarwal is suspected of helping exporters from both modules in sending money abroad.
According to the ED, Jain had been working as middleman for PR Forex, a Karol Bagh-based forex management company, promoted by Rajiv Wadhwa and Sanjeev Wadhwa. The latter, ED sources said, has faced prosecution under the Narcotic Drugs and Psychotropic Substances Act in India and is currently in the US where he is facing criminal charges for violation of local laws.
Jain allegedly helped the Wadhwas float 11 fictitious companies and open 66 accounts in OBC (Rajpur Branch in Ghaziabad) and 11 accounts in Axis Bank between 2006 and 2010. Through these accounts close to Rs 500 crore were sent abroad to accounts in Hong Kong. Two of these accounts were in HSBC Bank in Hong Kong. Between 2010 and 2014, Wadhwas allegedly opened one account each in ICICI Bank, Kotak Mahindra Bank, ING Vysya (now merged with Kotak), Yes Bank, DCB Bank and Dhanlaxmi Bank and carried out illegal transactions. Following this, they operated through Aggarwal.
An ED statement on Jain, who has also faced Directorate of Revenue Intelligence probe earlier, said: “It has emerged that he and his associates are involved in remitting funds out of India illegally against the imports which actually have never taken place. Illegal operations by Jain is being carried out in India as well as in Hong Kong. He is having two firms in Hong Kong namely Tanvi Enterprises and Pacific Exim. Jain is engaged in depositing unaccounted cash in the banks in India, its transfer to Hong Kong in HSBC Bank and onward transmission of the same to China to settle the unaccounted outstanding dues of various importers of India with Chinese suppliers.”
Identifying some of the 11 bogus firms that allegedly were used to send money abroad as Daksh Impex, Pacific Exim (India), Alaska Trading, Aadinath Exim (India), Apple Computers, Sai International and Jai Bharat Impex, ED said that Jain used forged documents and fake identities to receive the remittances in Hong Kong. Email queries sent to various banks did not elicit any response till the time of going to press.