Three public sector banks —the State Bank of India, Bank of Baroda and UCO Bank — have again defied the directive of the Directorate of Revenue Intelligence (DRI) to provide details of inflated bills worth Rs30,000 crore generated by several corporate houses involved in a coal import scam.
The DRI served notices on these three PSU banks and ICICI Bank in May after it was discovered that corporate houses used their foreign branches for money laundering and generation of inflated bills. Only ICICI Bank has submitted the details of the frauds committed by big corporate houses while importing coal from Indonesia.
Due to non-cooperation by these three banks, the DRI alerted the Department of Revenue and the Prime Minister’s Office. After the PMO gave clearance for the probe, Revenue Secretary Hasmukh Adhia directed the DRI to again issue notices to the heads of SBI, BoB and UCO Bank in the second week of August.
During the probe, the DRI found that several big corporate houses had generated highly-inflated bills while importing coal from Indonesia. The corporate houses set up shell companies, which raised inflated bills through branches of these banks in countries like Singapore, Hong Kong and Dubai. This led to increase in the price of imported coal to more than 250 per cent, which ultimately affected the price of electricity generation in India. The scam took place between 2008 and 2010. In India, 90 per cent of the coal is imported from Indonesia and five per cent comes from Australia.
As many as 40 companies in the power generation sector are facing the DRI’s probe as they directly imported coal from Indonesia but generated bills through the shell companies.
As per the investigation, 85 per cent of the invoices were generated through the SBI’s foreign branches and 10 per cent of such bills were generated through the foreign branches of BoB and UCO Bank. Five per cent of the inflated bills were generated by foreign branches of the ICICI Bank.
The DRI officials said within two weeks of receiving the notice in May, ICICI Bank authorities submitted the details to the probing officers. However, the SBI, BoB and UCO Banks did not oblige the DRI, Mumbai Unit, despite repeated requests.
SBI Chairperson Arundhati Bhattacharya wrote to Adhia expressing her inability to cooperate with the DRI. “In her letter, she misquoted the rules governing operation of the bank branches in Singapore and claimed that these branches follow the banking secrecy norms of that country,” said officials.
“The RBI could have accessed all these details, but they also acted funny,” they added.
The Pioneer had sought response from the heads of SBI, BoB and UCO Bank through emails and letters sent to them on August 24. Responses were sought from SBI’s Bhattacharya, BoB Managing Director PS Jayakumar and UCO Bank Managing Director Ravi Krishnan Takkar. While, the SBI and UCO Bank did not reply, BoB said it could not share details with the DRI as its branches in Dubai were governed by the laws of the UAE and giving details would invite a penalty from Dubai authorities.
However, the DRI officials claim that the so-called rules quoted by BoB and earlier by SBI Chairperson do not apply in the investigation of financial crimes. “The explanations provided by the bank heads go against the UN convention against money laundering. They are telling blatant lies to protect the corrupt corporates,” said senior officials of the probe agencies.
“If ICICI Bank can share the details of bills generated by their foreign branches, why can’t the PSU banks do the sameIJ As the ICICI is a private bank, the DRI officials could straightaway initiate actions like interrogation etc against their heads. But the PSU bank bosses are well aware that the DRI could not start such actions against them without approval from the Government,” they added.