Chargesheets filed in Rs 1,000-crore JVG scam

The Economics Offences Wing (EOW) of the Crime Branch, which arrested Colonel Bhan in June this year, recently filed chargesheets against two of the companies of the JVG group — JVG Investments and JVG Finance Ltd. During investigations, the EOW found that all the investors had fallen prey to the irresistible amounts of interest beingoffered by the companies under various investment schemes.

Major General Lohchab said in his complaint — on the basis of which the case was registered — that his wife Krishan Lata had invested Rs 1 lakh in fixed deposit in September 1996 for one year. The company issued her a postdated cheque for the amount and four quarterly interest cheques of Rs 6,565 each. For another deposit of Rs 25,000 (for two-and-a-half years), he was issued a cheque for Rs 50,000 dated July 31, 1998.

When the time came for collection, the cheques were dishonoured because of “insufficient funds”. The story was repeated with all of JVG’s investors. According to the chargesheet, the company collected deposits from the public through 9,000 branches spread all over the country and issued postdated cheques which were later dishonoured.

The Crime Branch later traced 36 bank accounts of JVG group of companies and froze them. Sixteen properties of the JVG group of companies in upmarket areas of Delhi, Mumbai and Uttar Pradesh werealso attached.

The scrutiny of records and bank accounts is under way, and investigations have revealed that over Rs 1.95 crore were withdrawn by the company bosses from an account (Number 828) in Corporation Bank, Bhikaji Cama Place from December 12, 1994, to October 6, 1997. An amount of Rs 5.92 crore was transferred to JVG Finance Ltd during the same period and another Rs 1.12 crore was transferred to other sister concerns. By December 15 last year, the account had hit rock bottom: there were only Rs 9.61 of the investors’ money left.

According to the statement of Gulbir Singh, Manager of Non-Banking Financial Affairs in the Reserve Bank of India (RBI), who inspected the JVG group, “there was concentration of power at the top, with no established systems and procedures, and no hierarchy of management team with defines levels of authority and responsibility…. There was no system of internal audit in the group. Control accounts were not reconciled with the subsidiary ledgers, making the control on theaccounts ineffective.”

According to the chargesheet, JVG’s record of compliance with RBI directives was pathetic. “The company disregarded virtually all the provisions of RBI directions. It raised deposits many times more than its entitlement as per the directions; it paid rates of interest in total disregard to the limits on rate of interest as prescribed and it did not file any returns or balance sheet as required.”

The chargesheet further states that accused Colonel Bhan, being a retired military officer, managed to “induce” serving and retired defence personnel to deposit their hard-earned money with promise of high returns. He was an authorised signatory of the company and liable for acts of commission and omission resulting in defrauding of money.