To intensify the probe the into the alleged Rs 300-crore scam at Citibank, a team of senior Reserve Bank of India officials landed in the Capital on Monday for a special scrutiny of the bank?s Gurgaon unit. The scrutiny was conducted on the day Gurgaon police arrested Sanjay Gupta, CFO of Hero Group, one of the major entities that did business with the prime accused in the scam, Shivraj Puri, a Citibank employee.
Police officials told FE that Gupta was ?colluding? with Puri who was a relationship manager at the bank. Gupta apparently received Rs 20 crore as compensation. The police is also likely to question other CFOs in the Hero Group later this week.
Citibank is learnt to have already submitted the relevant documents to RBI and the scrutiny would examine how a particular account of Citibank could get so much of inflows, without raising concerns.
Capital market regulator Securities and Exchange Board of India too expanded the scope of its concurrent probe to find whether any third party cheques were issued by Shivraj Puri to the brokerages through which he did business.
?The point that needs to be looked at is whether the brokerage houses had determined the source and end-use of the money. This is a part of regular due diligence that every mutual fund or brokerage house needs to be follow before investing the money,? a source privy to the details told FE. He said that Sebi would also look at the role of the Citibank auditors. ?Every bank has to have a sound mechanism of checks and balances. In this case, it seems they have been flouted,? the source added.
FE has also learnt that the members in the extended Munjal family were misled by Hero’s Gupta. A senior police official told FE, ?We arrested Gupta at 11pm last night (Sunday). Our probe has shown that he was indeed in touch with other CFOs and family members of the Hero Group. He was colluding with Puri as well,? he said. Last week, police had said that Naveen Munjal of Hero Exports alone had invested Rs 50 crore with Puri. The official added the Gurgaon police were awaiting Sebi’s report on the scam. A two-member Sebi team reached Delhi Monday to ascertain various aspects of the scam. ?We have sought Sebi’s help. They should submit a report soon,? the official said. Gupta was arrested under Section 120B of the Indian Panel Code which deals with criminal conspiracy. An official email sent to the Hero Group spokesperson went unanswered.
Despite repeated attempts, Naveen Munjal could not be contacted. Though the Brijmohan Lall wing of the Hero Group in a statement last week acknowledged that it had invested up to Rs 28.75 crore in treasury operations through Puri, the extended family’s investments could be much higher. What attracted Munjals and other HNIs to the scheme was an assured return of up to 36% per year. The Hero Group, however, claimed that Hero Honda did not have any connection with the scam.
