The Incredible Banker Page 23
He read the entire article again.
A massive money laundering scam, with far reaching consequences, has been unearthed by our correspondent today. It is suspected that over 100 crore of funds have been diverted to the Naxalites through the account books of Greater Boston Global Bank. While it is early to say if there has been any connivance on the part of the bank officials, the recent arrest of Deepak Sarup, an alleged Naxal sympathiser, does raise questions on the sanctity of the seemingly untouchable foreign banks in India.
The modus operandi followed here is very simple. A Naxal sympathiser sets up a company that acts as a front. The company acquires credit cards for its employees through a hungry and ever-willing bank, Greater Boston Global Bank in this case. The bank, in its eagerness to issue cards and meet its monthly targets, compromises on processes and documentation requirements and ends up issuing credit cards to benami parties, who don't exist at all.
These cards then are used by Naxal operatives to transact and buy weapons and food and groceries to feed their large contingents and troops. The transactions are smartly monitored by a cell of militants, who then inform the sympathisers pan India. This network of sympathisers then pay into the respective credit card accounts at various locations in cash. This too raises eyebrows because not a single payment into the 968 card accounts is of value more than 50,000. It may be prudent to point out that fifty thousand is the threshold beyond which one is expected to quote a PAN number while making a cash deposit and these transactions tend to get monitored by the tax authorities. The Naxalites have smartly ensured that cash payments into these cards never crosses 50,000, effectively laundering over 100 crore without getting noticed. While this does away with the requirement of quoting a PAN number while making cash deposits, any surveillance by the income tax authorities, on account of the customer spending more than 2 lakh a year is suitably nullified by the fact that the customer is non-existent. Who will the IT notice get served on?
Take the case of Francis D'Silva, the Naxal commander who was killed during the massacre of 55 innocent SPOs in the Ghauli forests in Ranibodli. A credit card with a credit limit of three lakh was recovered from his body.
A critical examination of the conduct of the card account in the last twelve months reveals that he has spent an average of one lakh every month. Payments have been made on time, every single month, always in cash.
What also surprises here is that while the customer, i.e. Francis D'Silva, was supposed to be based in Mumbai, the transactions were in Kolkata, Raipur and Chhattisgarh and the payments into Francis's cards have been made in cash at the branches of GB2 in Hyderabad, Chennai, Mumbai and even in branches like Thiruvananthapuram and Cochin. For instance on twenty-first of August, Francis spent45,600 at a grocery store in Jamshedpur, and the same day a 48,000 cash deposit was made into the card account in the Kolkata branch. Such instances can be justified as a one-off, but if all transactions in Francis's account follow a similar pattern it leads to questions on the modus operandi and even on sources of these funds.
If one individual namely Francis has followed such a modus operandi, it can be termed as someone defrauding the bank. However if in all the 968 credit cards issued to benami employees of Symbiotic Technologies, a bogus company, the same modus operandi is followed, it points to a large scale money laundering scam.
Unaccounted cash from Naxal sympathisers made its way every month through this operation to fund the Naxalite war against the nation. The average money routed through each of these 968 credit cards was one lakh a month that makes it close to 9.7 crore to fund Naxals through this scheme. In twelve months the money which has changed hands is in excess of a hundred crore.
The most shocking lapse seems to be clearly on the part of GB2. Reserve Bank of India has stipulated that banks collect certain mandatory Know Your Customer (KYC) documents from customers before they open any account. The originals of these documents are to be sighted by the bank employee before any account is opened. This process needs to be followed for issuance of credit cards, too. However in the case of Francis D'Silva, the credit card seems to have been issued by GB2 based on the KYC document (passport) provided by his company, without a bank official sighting the originals. No verification of the residence address was carried out.
Alongside this article is attached a copy of the forged passport of Francis D'Silva, which formed the basis of the card issuance. The photo on the passport is completely different from the photograph of the individual who was killed in Ranibodli. (Real photo released by CBI in inset.) It is suspected that the entire lot of 968 cards issued to Symbiotic Technologies followed this lax process.
It is now clear that the cards delivered to the HR executive at Symbiotic Technologies, a fraudulent company, never reached the employees. In fact it was never intended to. In fact there were no employees in Symbiotic – there were only co-conspirators.
These cards made their way to the Naxals of central and eastern India and became a mode of laundering black money from sympathisers to support the Naxal cause. Arms were bought, food and rations were procured using the card as a front and the same was funded subsequently by unidentified Naxal sympathisers in cash. A brilliant game by the Naxalites to beat the banking system in the country.
This raises the following key questions:
1. Why did GB2 not follow laid down procedure on KYC when they issued cards to employees of Symbiotic Technologies?
2. Why weren't such large-scale cash transactions into a particular set of customer's credit card accounts identified through internal control processes of GB2?
3. Was GB2 only a conduit for routing of these funds or were employees of GB2 or the organisation itself a willing partner in the entire scam, in return for financial gains?
Most of these questions remain unanswered. However we are confident that as days go by and more data becomes available, we will be able to get to the bottom of this scandal, which threatens to rock the foundation of the world's largest democracy.
CBI today released two pictures of the alleged Naxal killed in the Ranibodli massacre. The picture on the left is the actual picture of the Naxalite while the one on the right is the picture as it exists in the passport of Francis D'Silva (courtesy GB2). CBI has requested that anyone with any information on the Naxalite should immediately contact the Anti Naxal Cell of CBI at 123455678. You may also contact the offices of this newspaper at 2222222222.
This newspaper headline created a furore both within and outside the bank. Within the bank, the entire PR machinery went into a tizzy. The reputation of GB2 as a compliant bank and as a solid process-oriented bank was shred to bits by the front page of The Times of India.
Ronald was livid. He was furious at his team, particularly Saurabh, Bhisham and the fraud team led by Inder, for not informing him at the right time. He was shocked that what they could not figure out with their massive databank was easily identified by someone from outside who had limited access to their data. "This is another failure of the India GB2 team,' he screamed. 'We have serious credibility issues in the region which have been aggravated by this report.'
He looked at Bhisham and said, 'I want the fucker who is responsible for this failure to be brought to task. Do you understand? I want heads to roll.' He then turned towards Inder. 'And, Inder, I want a complete report on Symbiotic from you. You have only twenty-four hours for it. Now come on, guys, time to get moving!' he shouted. Little did he know that Inder's report would say nothing different than what was already there in the papers!
Andy was extremely thrilled with the reaction to his morning story. He had gambled with the story. In fact his career was at stake. It could have backfired if it had turned out to be plain speculation. But it was Karan's conversation with Kavya which had convinced him about the veracity of the story. If even one of the credit cards that Kavya had checked had not followed the same transaction pattern, he would have withdrawn the story. With 20 random cards displaying the same transaction pattern, it was prudent fo
r him to go ahead. In the worst case, he could have been pulled up for exaggerating the facts but no one could deny that there was definitely a huge problem which needed to be fixed.
In Karan, he saw a rising star; someone who had full faith in his convictions and had the potential to deliver the goods when it mattered the most. This story had even raised Andy's own stakes within the group.
That evening Karan, Bhaskar and Andy were at Indigo in Colaba where they celebrated the expose over a drink. It was a nice resto-bar in the lane next to Cafe Leopold. Andy laid out the newspaper on the table in front of them.
'Guys, many, many years from now, when you will be old and taking care of your grandchildren, you will reminisce this day and the thought of what's happened today will give you extreme joy. It will be one of the most successful wins of your career. Mark my words! It can't get better than this. Foreign banks, government, Naxalites, money laundering and threats,' Andy spoke.
"Threats?' both Karan and Bhaskar called out in unison.
'Haha...yes. Thakurta came to meet me this afternoon. He doesn't want us to steal his thunder. Wanted us to go slow,' Andy told them.
'What did you say?' Karan asked him.
'It doesn't make sense to be belligerent, guys. I called up our management to see what support we have. Never enter into a battle without any cover. If you are destined to lose, don't ever try to battle. Wait for an opportunity where you are sure to win.' Andy said philosophically.
'That's all fine but what did you say?' Karan was getting impatient with the lecture.
'I told him to mind his own business. We will do our job the way our readers want.'
'He bought into it?' Karan asked.
'No, he didn't, but you can't fuck around with the media. Can you?' Andy smiled as he said this. And then he looked at the front page of The Times of India. He looked at the two pictures on the front page. One was of Francis D'Silva released by the CBI and the other of Francis D'Silvas as his passport copy picked out from the document given to GB2 while applying for a credit card. 'Whoever you are, Francis, you will be kept alive by the media for long.' And then he looked at the bar where a couple of cute-looking ladies were ordering their drink and waved out to the barman. Within minutes their drinks arrived and they celebrated their famous exposé.
Thursday, 17 December 2009
The Day of the Summons
Mumbai
RONALD had not expected a summons from the RBI so soon.
The newspapers had speculated about this mess-up only a day back. And the governor of the RBI had already served him a notice. Everyone knew that RBI had taken a very categorical stand on KYC documents and account holder details, but he didn't expect them to give him a show cause notice, which seemed more like a threat. And the accusation levied on them – waging a war against the nation -was shocking. At the least he should have been given an opportunity to defend the bank before the harsh notice was issued. The problem with these notices was that they normally made it to the records. And long after the issues died down and problems fixed, they still remained on record and came back to haunt at the most inappropriate of times. Ronald was worried about this impact, too.
But there was no point worrying about it because it was a fait accompli. RBI had issued a warning letter and sought answers from GB2. He had to now figure out how to handle this issue.
Bhisham, Inder and their respective teams along with Mansi, Ramneek and a few others were waiting for Ronald as he came back from the RBI.
Thankfully the Francis issue was relegated to the third page on The Times of India that day. It was largely because of an unfortunate mishap. The speeding Sealdah-bound Uttar Banga express had rammed into the rear of a stationary Bhagalpur-Ranchi-Vananchal express, at Sainthia railway station in Birbhum in West Bengal early Wednesday morning. Over 65 people were killed in this accident. The railway minister had started making noises about the possible causes of the accident. Naxal activism was also being suspected as one of the possiblities. Even the dumbest of souls would know that this was because of a signalling error rather than the Naxals.
Ronald showed the letter from RBI to Saurabh. "This is why I was summoned by the Governor,' he said looking at the others. 'So what does our investigation show?'
Bhalla walked in. He was a little late for the meeting and apologised.
'Bhalla, Anything new?' asked Ronald, turning his attention towards him.
'Ronald, without going into the details, everything that the newspaper says is true. Symbiotics is a fraud company. It does not exist any more. We have seen small companies like these being set up fraudulently in the past but have never seen such a large-scale organised fraud. We got misled by the presence of the organisation in the virtual world, sexy websites, visits by senior management and their faςade of a threat of losing the deal to Citibank. In fact we have a relationship with a company called Symbiotic Systems in the UK. At that point in time, we were misled into believing that this company was a sister concern of the British company. Having said that, we have got all the approvals from our credit folks. Bhisham has approved it himself. In fact he put in some additional checks as well just to be sure.' He then looked at Bhisham and said, 'Bhisham, would you want to add something?'
Bhisham was cornered. He couldn't say anything but accept that they had approved this transaction. 'Yes but...,' he was about to say something when Bhalla cut him short.
'Ronald, in fact only after receiving the written approval from credit did we close the deal with Symbiotic. Even they took their time in considering the proposal and granting their stamp of approval.'
The blame game had begun and Bhalla had won round one. Now even if Bhisham spent hours talking to Ronald to convince him that he was being framed, Ronald wouldn't believe him. He was, in a matter of minutes, a condemned man.
Back in the offices of TO I, the mood was remarkably different than the boardroom of GB2. The TOI team was upbeat. They had clearly stolen the lead over most of the other newspapers. The public loved it. Who wouldn't ? Who doesn't want to see the big and mighty take a tumble in the battle against the Naxals?
Karan had agreed with Andy that the article for Friday would be on the frauds in the mortgage business and how it was possible to launder money by taking loans from banks. It was fast becoming Karan's week at the newspaper. He had just got out of a meeting with Andy and was casually flirting with his secretary when the phone on her table rang. She picked up the phone.
'Yeah, he is here. Do you want to speak to him?' she asked the caller.
'You want me to tell him this...oh, ok...I will let him know. He will call you. Ok, take care,' and she put the phone down. Karan had no idea what the caller was saying.
'There is someone at the reception for you, love,' she told Karan.
'Who would it be? At this hour?' He looked at his watch. It was past six in the evening. He hadn't even completed the article he had to write.
'Dunno,' She shrugged her shoulders. 'Apparently, he wouldn't even tell the receptionist his name. He is insisting that he will only see you and no one else.'
'Ok. Can you please check with the reception if he could wait for 30 minutes? I will just complete and send the article for tomorrow's edition and then meet him.'
'I will, but maybe you would just want to see who it is. Maybe it is urgent,' she said
'Babes, nothing is more important than this money laundering Naxalite case. Nothing...,' He smiled at her. 'Will you please let the guys at the reception know that I will be down there in thirty minutes?'
'As you say.' She called the reception. 'Karan will be down in thirty minutes. He is in a meeting. Will you please ask the gentleman to wait?'
Karan rushed to his desk. He had to complete and send the article to the editing desk in the next thirty minutes. Even though he was already behind deadline, the newspaper was very tolerant towards him since he was leading the Naxal story. He opened the top drawer and pulled out his cellphone. He had left it there for charging. There were
fourteen missed calls of which twelve were from the some unknown number. However, If someone had tried to call him twelve times in ten minutes, it had to be important. He dialed the number. It was picked up in the first ring.
'Mr Panjabi?' the receiver of the call asked Karan.
'Yes, who is this?'
'Hi, I am Jinesh Shah. I am waiting for you at your reception.'
'Oh, it's you. Sorry, I didn't recognise you. Have we met earlier?' Karan asked him.
'No, we haven't. I need to see you for five minutes.'
'Mr. Shah, thanks for coming all the way. But I am slightly busy. Can we meet tomorrow morning?' Though he had committed earlier that he would be down in thirty minutes, he was now trying to wriggle out of the meeting.
'Mr Panjabi, what I have might be of interest to you. I am not too confident of going to the CBI, so I came to you. I would rather have the press know before the CBI. I am safe that way.'
'What are you talking about?' Karan seemed interested now.
' You printed those two pictures in the newspaper this morning. I might be able to give you some insights into the guy.'
'What?'
'Yes, I have met this gentleman.'
'When? Where? Who is he? How do you know him?'
When Karan rattled off so many questions, Jinesh slightly clamped up. 'Look. I can't talk on the phone. I am at your reception and there are too many people around. Can we meet in person? I have left my coffee shop to my employees and come here to see you. I also need to head back.'
'I will be there in five minutes.' Karan slammed the phone down, logged into his PC and quickly skimmed through the article he had written. He didn't waste time in rereading the entire article. He pressed send' and off it went. And as promised, within 5 minutes he was at the reception.