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RBI investigating Citibank fraud
Published on 6 Jan. 2011 1:05 AM IST
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The Reserve Bank is investigating the `300 crore fraud in Citibank’s Gurgaon branch, which saw diversion of depositors funds in stock markets. “RBI is investing the matter (Citibank fraud),” a key Reserve Bank source said.
The fraud at the Citibank’s Gurgaon branch, involving diversion of depositors money into the stock market, was uncovered last week. Several high networth individuals (HNIs), including promoters of Hero Group, were lured by Citibank’s Relationship Manager Shivraj Puri, the main accused in the scam, into investing funds on promise of high returns.
Victims of the fraud have complained to the police that their securities were encashed without their knowledge.
Sanjeev Aggarwal, managing director of Helion Advisors, had yesterday filed an FIR with the local police, alleging he was cheated of his life’s savings of `32.43 crore in the fraud.
Besides senior officials of the bank, Aggarwal named Indian-born global CEO of the Citibank Vikram Pandit and Chairman William R Rhodes in the FIR that alleged criminal breach of trust, falsification of accounts, cheating and criminal conspiracy by the bank officials.
Citibank, however, dismissed allegations of involvement of its senior executives in the fraud.
The local police today ruled out the possibility of questioning Citibank’s global CEO Vikram Pandit and other top honchos in connection with the scam.
Net widens on alleged Citibank fraud case
The Hero group Wednesday said two more of its executives may have been involved in the `300-crore Citibank scam even as the businessman who charged the bank’s global top brass with complicity alleged that the fraud ran through the organisation.
“One person can’t do this. It is a systemic failure. It runs through the organisation. You can’t hold just one person responsible for it,” Sanjay Aggrawal, managing director of Helion Ventures, who claims to have lost `33 crore, told reporters here. Aggrawal, who co-founded business process outsourcing firm Daksh that was later acquired by IBM, said it was a normal practice at Citibank to take customers’ signature on blank documents. He claimed he was investing at Citibank since 2004.
“As standard operating practice, Citibank gets its customers to sign on blank documents which allow them to buy and sell securities. That instrument was used to move money into employees’ own accounts rather than my account,” Aggrawal said.
“The fraud took place in the last one year,” he said, adding that the bank informed him about the fraud in the first week of December. “The agenda is both about the fact that there has been a wrongdoing. They need to own up to that and then make good my losses.”
Hero Group said after initial probe, two employees Ganpat Singh and Gaurav Jain, working in the accounts department, were also identified to have been in possible collusion with suspended associate vice president Sanjay Gupta and Citibank employees in the alleged fraud.
“They have been sent on leave with immediate effect,” Hero Group said in a statement. Gupta, who was also the chief financial officer of Hero Corporate Services, was arrested Monday for his alleged connivance in defrauding bank customers, including his own firm, of an estimated `300 crore. He was later remanded to five-day police custody by a court.
Hero Corporate Services manages the services businesses of the Hero Group, which include real estate, financial services, information technology-enabled services, consulting and advisory, integrated learning and education businesses.
Citibank’s relationship manager Shivraj Puri, the main accused, had already been taken into police custody and is due to be presented in a court again here Thursday. In his complaint filed at a Gurgaon DLF-II Police Station, Aggrawal accused Puri and others of falsification of accounts, breach of trust and criminal conspiracy.
Police alleged that he cheated investors by promising to invest their money in schemes offering high interest.
Puri allegedly managed to con companies and high net worth individuals after forging a Securities and Exchange Board of India (SEBI) document that purportedly backed his claims about schemes offering high returns. Aggrawal’s comments came a day after he filed a cheating complaint against Citibank and 11 others, including its chief executive Vikram Pandit, chairman William R. Rhodes, chief financial officer John Gerspach and chief operating officer Douglas Peterson.

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