NT compiles a list of major financial crimes that shocked India

Chennai: Ever since Punjab and Maharashtra Cooperative Bank (PMC Bank) crisis unfolded, citizens across India are worried by the mounting financial stumbles that have plagued our nation as our economy continues to stumble downward. In this article, News Today compiles a list of major white-collar crimes that rocked our country.

Shady lendings – PMC Bank
Customers of PMC were in for a shock when they received a message stating it has been put under directions by Reserve Bank of India (RBI) for six months. Then media reports emerged that PMC Bank had granted a loan of Rs 96.5 crore to debt-laden realty company Housing Development and Infrastructure’s (HDIL) promoter Sarang Wadhawan, whose company had already defaulted on a Rs 2,500-crore loan given by lender.

HDIL promoters Rakesh Wadhawan (R) and his son Sarang Wadhawan (L)

Ignoring rules, PMC Bank sanctioned the personal loan in August and it was over and above the Rs 2,500-crore loan that HDIL had ceased repaying, and which the bank failed to classify as bad loans. PMC Bank kept dealing with HDIL even when it was facing insolvency proceedings in National Company Law Tribunal (NCLT).

Earlier, news reports mentioned that just one account – HDIL – was the single reason for the PMC Bank’s woes, which was subsequently acknowledged by PMC’s managing director, Joy Thomas. Wadhawan and HDIL took loans from PMC Bank to clear Bank of India’s (BoI’s) dues, which had initiated bankruptcy proceedings against the company for allegedly defaulting on loans of around Rs 520 crore. As per latest reports, HDIL owner Rakesh Wadhawan was arrested by Mumbai Police.

Quid pro quo – ICICI Bank & Videocon

Chanda Kochhar

In October 2016, ICICI Bank-Videocon scam cames into spotlight after a whistleblower Arvind Gupta, an investor in both, raised concerns through a blog. Gupta alleged that Chanda Kochhar influenced a Rs 3,250-crore loan to Venugopal Dhoot-led Videocon group in 2012 in return for a deal in NuPower Renewables and Supreme Energy, a clean-energy firm run by her husband Deepak Kochhar.

Gupta wrote to Prime Minister, RBI Governor and other authorities demanding a probe but it gathered no attention, reported ET. Gupta alleged that a company owned by Dhoot loaned Rs 64 crore in March 2010 to NuPower Renewables that he and Deepak Kochhar had jointly promoted two years ago. A complex web of deals resulted in a trust controlled by Deepak Kochhar acquiring the lending company six months after Videocon Group received loan from ICICI. The transfer of company shares to Kochhar’s trust was made at Rs 9 lakh. A company that loaned an amount of Rs 64 crore was acquired by the trust Deepak Kochhar controlled for just Rs 9 lakh which naturally raised eyebrows.

Dhoot also sold his 50 per cent stake in NuPower Renewables for Rs 2.5 lakh to Deepak Kochhar. Gupta alleged that ICICI awarding loan to Videocon and loan later becoming an NPA in 2017 were due to Dhoot’s business relations with Deepak Kochhar whose wife, Chanda, was part of the commiittee that sanctioned the loan. Moneycontrol said, nearly 86 per cent of Videocon’s ICICI Bank loan remains unpaid.

Diamond fraudster – Nirav Modi

Nirav Modi

On January 2018, associates of Diamond R US, M/s Solar Exports and M/s Stellar Diamonds approached Punjab National Bank (PNB) with a request for LoUs to make payment to its overseas suppliers. The bank demanded a 100 percent cash margin for issuing LoUs but the firms informed they had received LoUs without any such guarantee previously. Branch records didn’t show any such facility having been granted to the firms as PNB suspected fraud and began digging into transaction history.

PNB then filed a complaint with CBI. It was alleged that Nirav, Ami Modi, Nishal Modi and Mehul Choksi (partners of M/s Diamond R US, M/s Solar Exports and M/s Stellar Diamonds) in collusion with two bank officials cheated PNB. The two PNB official issued fraudulent LoUs to Hong Kong-based creditors on behalf of three firms associated with Nirav Modi and Gitanjali Group. By May 2018, the scam rose to Rs 14,356.84 crore. Latest reports say Nirav was remanded in judicial custody until 17 October by UK court.

King of ‘Good times’ – Vijay Mallya

Vijay Mallya

Liquor baron, Vijay Mallya (popular for his flamboyant lifestyle and poor businesses) is being investigated by the Enforcement Directorate (ED), Central Bureau of Investigation (CBI), Serious Fraud Investigation Office (SFIO), and Securities and Exchange Board of India (Sebi) for defaulting loans of over Rs 10,000 crore to Indian banks led by State Bank of India (SBI). Several of his firms including Kingfisher Airlines stumbled with losses.

Inflating accounts – Satyam Computers

B Ramalinga Raju

The IT sector took a shocker after former chairman and CEO B Ramalinga Raju of the now-defunct Satyam Computer Services wrote a letter in 2009 confessing that the company misrepresented its accounts to its board, stock exchanges, regulators and investors. NYT reported that, the Indian affiliate of PricewaterhouseCoopers (the company’s auditor) had certified Satyam Computers having $1.1 billion in cash when the real number was $78 million. Eventually, Ramalinga Raju was arrested.

Mohammed Rayaan