Six, including HDFC officials held in Bank of Baroda scam

The Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED) have arrested six persons, including two officials of Bank of Baroda (BoB), in connection with the alleged illegal remittances of Rs6,100 crore to Hong Kong through BoB's ranches in New Delhi.

The arrested included S K Garg and Jainish Dubey, both assistant general managers at the foreign exchange division of BoB's Ashok Vihar branch, CBI sources said, adding that they were arrested for criminal conspiracy, cheating and provisions of the Prevention of Corruption Act.

The remittances were made by splitting the cash into amounts below one lakh dollars so as to avoid automatic detection by software used by banks to alert them about such transactions, CBI sources were quoted as saying.

It was found that an estimated Rs6,000 crore was transferred through nearly 8,000 transactions done between July 2014 and July 2015.

The report says CBI has prima facie information about their alleged involvement and pecuniary gains in facilitating these transfers, which are still being probed.

As per the CBI FIR, "59 current account holders and unknown bank officials conspired to send overseas remittances, mostly to Hong Kong, of foreign exchange worth approximately Rs6,000 crore in illegal and irregular manner in violation of established banking norms under the garb of payments towards suspected non-existent imports".

While CBI is probing the corruption angle in the funds transfer case, the Enforcemenrt Directorate of the department of revenue intelligence is looking at the case to check money laundering and hawala (illegal money remittances) transactions.

Officials of the Enforcement Directorate, meanwhile, arrested four persons, including an HDFC bank employee, in connection with the case.

The ED arrested Kamal Kalra, working with the foreign exchange division of HDFC Bank, Chandan Bhatia, Gurucharan Singh Dhawan and Sanjay Aggarwal after questioning them at its office.

Sources said the four allegedly connived with each other in "forming" fake companies and business entities in Hong Kong by "over valuing" the export value and subsequently claiming duty drawbacks.

While ED investigations revealed that the HDFC employee was allegedly helping Bhatia and Aggarwal for remitting the amount through BoB against a commission of 30-50 paise per US dollar remitted abroad, Bhatia, in collusion with Dhawan, an exporter of ready-made garments, helped to form companies in India to remit money to those based in Hong Kong.

They allege that Aggarwal was successful in sending tainted foreign remittances worth Rs430 crore through the BoB branch in Ashok Vihar in a short span of time.

The ED said BoB on Monday informed it that "the total amount deposited in the 59 accounts was Rs5,151 crore and only 6.66 per cent (Rs343 crore) of this amount has been deposited in cash in the bank while remaining amount of Rs4,808 crore came through other banking channels."

The agency said Dhawan allegedly obtained "duty drawback to the tune of Rs15 crore in a short period of 6-7 months" and was in the process of putting in similar applications before the act was bared.

ED is now investigating further to check the activities of the remaining suspected 44 fake firms which pumped in money to overseas locations in a similar manner.

Sources said more arrests of similar middlemen and other operatives, including BoB employees, could take place in the near future.

Directorate sleuths had participated in a search operations conducted on accused BoB executives last week and had seized a number of documents.

The Ashok Vihar branch of BoB is a relatively new one which had got the permission to entertain forex transactions only in 2013.

Enforcement Directorate sources have termed it to be a case of trade-based money laundering, where accused traders evade custom duties and taxes to generate slush funds.

All the accused arrested by it, ED sources said, were alleged middlemen for at least 15 fake companies, out of the total 59 which were involved in the perpetrating of the economic crime unearthed recently.