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Tuesday, October 20, 2020

FinCEN Files — Bank reported fraud, UK link of an IPL team sponsor

In 2013, KPH Dream Cricket, which runs Kings XI Punjab, went to court against team sponsor NVD Solar International Ltd for “cheating and duping” them of $3 million in sponsorship fee. The SAR, filed by San Francisco-based Wells Fargo Bank, offers a clue to what went wrong.

Written by Jay Mazoomdaar | New Delhi | Updated: September 23, 2020 9:11:51 am
Wells Fargo’s SBLC unit found that none of the companies named in the request -- applicant Aerocom UK, beneficiary KPH Dream Cricket, warrantor NVD Solar -- were on the bank’s customer rolls.

The Indian Premier League, with its showpiece auctions and big-ticket sponsors, has surfaced on the US financial regulator’s radar too — in a web of transactions that involve a leading US bank, a little-known UK company, a Kolkata-based sponsor of an IPL team, and allegations of fraud and forgery.

These are the central elements of a Suspicious Activity Report (SAR) filed with the US Financial Crimes Enforcement Network (FinCEN), according to records investigated by The Indian Express.

In 2013, KPH Dream Cricket, which runs Kings XI Punjab, went to court against team sponsor NVD Solar International Ltd for “cheating and duping” them of $3 million in sponsorship fee. The SAR, filed by San Francisco-based Wells Fargo Bank, offers a clue to what went wrong.

In 2013, the bank had received “a $2,975,460 SBLC (Standby Letter of Credit) from Deutsche Bank AG in London” with KPH Dream Cricket as the beneficiary. The SBLC for nearly $3 million was sought by Aerocom UK Ltd, an air tubes manufacturer, with no apparent links to the team or the sponsor.

The SBLC said that “in case of failure of the obligator, NVD Solar International Ltd of Dhaka, Bangladesh, was to pay the amount due as per the terms of the contract”.

However, according to the SAR filed by Wells Fargo, the SBLC turned out to be “fraudulent” and was “declined”.

Wells Fargo’s SBLC unit found that none of the companies named in the request — applicant Aerocom UK, beneficiary KPH Dream Cricket, warrantor NVD Solar — were on the bank’s customer rolls. It concluded that the “SBLC is believed to be bogus, as a search of Wells Fargo electronic messaging system does not show receipt of this transaction”, according to the SAR.

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Meanwhile, an investigation by Wells Fargo’s Trade Finance Investigations unit concluded that a signature of one of its officers on the electronic copy of the SBLC was forged, according to the SAR.

It also found that an email sent to the bank’s International Wholesale Banking unit, using a Wells Fargo employee’s internal address, was fraudulent and that no business purpose could be established to substantiate the request, the SAR states.

The owner of Aerocom (UK) Ltd, John Hughes, did not respond to multiple calls and emails from The Indian Express seeking comment on his links to NVD Solar. Incorporated in 2000, Aerocom is a pneumatic engineering company that deals in air tube systems and carriers. In 2013, the Nottingham-based company declared a net asset of GBP 0.6 million.

NVD Solar did not respond to multiple emails from The Indian Express seeking comment. In August 2019, a Calcutta High Court order on a case related to the company noted that NVD Solar’s directors “could not be found”.

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Set up in Kolkata in 2003, NVD Solar Ltd launched operations in Bangladesh in 2012. In 2015, regulator Sebi ordered the attachment of NVD Solar’s bank accounts for recovery of Rs 1,000 crore after the company missed the deadline to refund Rs 594 crore it had allegedly raised illegally from the public. The company is in liquidation.

KPH Dream Cricket declined to comment. But company sources told The Indian Express that the dues from NVD Solar are yet to be recovered.

Also Read | Swiss Leaks, Panama Papers, now SARs: bank reports that alert law-enforcement agencies

According to a PTI report in October 2013, KXIP co-owner Ness Wadia had alleged that the team received only Rs 42 lakh from the sponsorship deal for Rs 14.3 crore and that NVD Solar gave “fake accounts of Deutsche Bank London, Wells Fargo Bank New York, Common Suisse Bank Limited, fake Swift message, fake names of officials, even sent us mails from fake IP addresses”.

When contacted, a Wells Fargo spokesperson said: “Wells Fargo has robust anti-money laundering policies and procedures in place, and we follow all applicable financial crimes-related laws and regulations. We are unable to provide any further comment.”

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