The alleged over Rs 6,000-crore Bank of Baroda (BoB) forex scam is threatening to open a Pandora’s box in the banking sector. While BoB and HDFC Bank employees have already been arrested by the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED), investigations have found that more banks could be involved.
One complaint in this regard, involving a bank other than BoB and HDFC Bank, has already reached ED headquarters and a case may be registered after the probe.
What has complicated matters further is the revelation that while remittances were sent to Hong Kong and Dubai via banks, actual exports were sent to Afghanistan. “The records show that the alleged exports were sent to Afghanistan but invoices were generated by Hong Kong importers. It is now a matter investigation as to who received them in Afghanistan and what the exports were linked to,” said an ED officer.
Much before 59 accounts, which are under the scanner of the ED and the CBI, were opened in BoB, 13 accounts were opened in HDFC Bank during February-March 2015 to send money abroad. It was HDFC Bank forex officer, Kamal Kalra — under ED custody — who allegedly introduced the unscrupulous exporters arrested in the case to BoB.
According to ED sources, exporter Gurcharan Singh Dhawan, arrested by the ED in the case, floated the idea of trade-based money laundering to Kalra in early 2015. Kalra allegedly agreed and helped Dhawan open 13 accounts through which several tranches of forex, all below $1 lakh, were sent to Hong Kong and Dubai. However, after these transactions, Kalra supposedly developed cold feet and told Dhawan that any more such transactions could arouse suspicion. He then introduced Dhawan to BoB Ashok Vihar Branch AGM SK Garg, also under CBI custody. Garg agreed and allegedly helped Dhawan and his associates — Chandan Bhatia and Sanjay Aggarwal — open 15 of the 59 suspect accounts.
Reacting to the developments, an HDFC Bank statement said: “The matter is being examined internally on top priority. The bank is also extending its full cooperation and support to the authorities. The bank has a zero-tolerance policy for any misconduct on the part of its staff.”
Elaborating on the suspected role of other banks, an ED officer said, “We have as yet scrutinised only 28 accounts. As investigations progress, more accounts may be found and more banks may come under the scanner. We already have a complaint about a bank where such transactions can be traced back to a decade ago.”
Sources in the agency said in the past 10 years some banks have taken over the role of hawala operators. This suits both the bank and the exporters. The bank generates business and the exporter saves money as hawala transactions cost Rs 1.60 per dollar sent abroad while the same transaction through a bank costs Rs 1.20. The agency is also preparing to attach properties of the arrested accused and has already identified some that were bought with the proceeds of the crime. Sources said in the six months following the opening of suspect accounts in HDFC Bank, Kalra made over Rs 1.5 crore via commissions of 30-50 paise he earned as commission per dollar sent abroad. Dhawan, too, made close to Rs 16 crore from the suspected accounts.
Agencies estimate that the total loss to the exchequer in terms of duty drawback falsely claimed by the accused is to the tune of Rs 250-300 crore. However, the foreign exchange violations as of now are being calculated at over Rs 6,000 crore.
According to the ED, the accused floated shell companies in India and Hong Kong. The Indian companies exported overvalued products by generating fake bills and the Hong Kong companies submitted fake import bills to claim duty drawback. The difference in the bills and actual value was moved through banking channels just as it happens through hawala networks.