Gold Loot

What is interesting is that Steel Ministry officials suspect that the Indian associates of the 49 defaulting Dubai buyers are either offshoots or partners of Mumbai-based businesses like Space Mercantile,Ushma Jewellery and Bonito Impex. Also,as MSTC’s present Chairman and Managing Director S K Tripathi told

The Indian Express,the same buyers had earlier created huge bad debts and defaults for gold imports with the State Trading Corporation.

While most of the gold was exported in 2008,it was after waiting for almost one year that Steel Minister Virbhadra Singh,in an order passed on September 14,2009,noted how the huge loss to the national exchequer was already evident. “There is no need to wait for any further inquiries before referring the case to the CBI… ,” he had written.

The curious response of the CBI,an agency which takes up scores of cases where the loss to exchequer or alleged corruption is a few lakh rupees,was received by the ministry on September 29,2009. The CBI advised the ministry to refer to them specific instances/ names of individual officers and public servants and noted how “it would be premature to infer criminal motives” in the case. This was after the vigilance department of the Steel Ministry had written repeatedly to the Central Vigilance Commission (CVC),labelling the gold export transactions as “collusive action”. Top bureaucrats had informed the CVC and the CBI that since the annual profit margin for its trade financing business was only around Rs 50 crore,what the ministry has described as its “misadventure” of Rs 600 crore “might put the very future of the company in jeopardy”.

The latest missive from the Vigilance Department was sent on July 8,2010 in which the ministry pointed out that their efforts of “conducting an effective investigation into the matter is going around in circles and has not yielded any conclusive results… a criminal investigation should be conducted into the matter to bring out the culpability of various individuals and entities and to hold them responsible for the consequences of their actions… .”

Internal findings of the ministry in the gold export scam have led to the following conclusions/ advice:

That the MSTC had failed to carry out due diligence and released/ disbursed Rs 639 crore to foreign buyers without verifying their antecedents and credit worthiness.

That the gold exports appear to be pre-planned with an intention to siphon off the money of MSTC… all the Indian associates (who sold the gold consignments to buyers in Dubai) have no accountability in any contract signed by the MSTC to repay the amount in case of default.

The malafide intention of the foreign buyers is apparent from the circumstances that all the 49 buyers have defaulted in one go… foreign buyers and officers/ officials of the MSTC appear to be hand in glove in the transaction.

No disciplinary action has been initiated by the MSTC either against former chairman Malay Sengupta or officers till date. A soft approach of the MSTC is sending a wrong signal as it indirectly implies that it is protecting the guilty officers/officials.

While saying that the export fraud was a problem he “inherited”,Tripathi pointed out that the consignments had been insured by the Export Credit Guarantee Corporation (ECGC),but it’s now refused to intervene and make recoveries. He informed that the MSTC has since obtained the opinion of Solicitor General Gopal Subramaniam in the matter.

“The SG’s opinion is clear on the ECGC’s liability to protect the interest of the MSTC in the Rs 600 crore default. We have also decided to file recovery suits against all the 49 Dubai-based buyers and as things stand it is only an investigation by the CBI and the Enforcement Directorate that can bring out all dimensions of the case,” he said.