Six persons allegedly involved in illegal remittances of over Rs 6,000 crore from Bank of Baroda (BoB) to Hong Kong and Dubai have been arrested by the CBI and Enforcement Directorate (ED). These include two senior officials from Bank of Baroda and an official from HDFC Bank.
On Tuesday, CBI arrested BoB assistant general manager S K Garg and foreign exchange officer Jainish Dubey after searches of their homes led to the recovery of some documents.
The ED arrested four persons including Kamal Kalra who works with the foreign exchange division of HDFC Bank. The other three, identified as Chandan Bhatia, Gurucharan Singh Dhawan and Sanjay Aggarwal, allegedly facilitated remittances sent abroad by 15 of 59 companies under the scanner.
According to ED, Kalra said during questioning that he had helped Bhatia and Aggarwal in remitting part of the over Rs 6,000 crore through Bank of Baroda on a commission of 30-50 paise per dollar sent abroad through banking channels.
Calling it a case of trade-based money laundering in which pecuniary gains were made through illegal receipt of duty drawback, ED sources said the accused, in connivance with BoB officials, created a fraudulent trade circuit where exporters claimed duty drawback on inflated export bills or non-existent imports and the bank generated massive business without anyone except the exchequer incurring losses.
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, ED sources claimed.
According to ED, Bhatia and Aggarwal were instrumental in setting up such shell companies. Bhatia, ED said, worked in close cooperation with exporter Gurucharan Singh Dhawan even as he used his own export companies to send money abroad. Bhatia was alleged to have sent Rs 420 crore through BoB in this manner, sources said.
Aggarwal too had formed firms in India to send foreign remittance in advance from BoB in lieu of non-existent imports. “He had formed companies in Hong Kong and Dubai with controls in his hand, so as to transfer required amounts in the bank account of importers. During this period, he had sent foreign remittances worth Rs 430 crore through BoB,” an ED official said.
The ED focus is on Dhawan. An exporter of finished goods such as readymade garments, fabric etc, Singh used to get the duty drawback on the exports made from his firms. “He was the main person since he used to get the drawback on the exported goods on the basis of overvalued exports. This amount of drawback was used to distribute commission at various stages,” an ED officer said.
“Investigations have revealed that Dhawan got duty drawback amount to the tune of around Rs 15 crore in 6-7 months,” the ED officer said.
The accused have been remanded in ED custody for four days.