Cobrapost’s Shocking Mega Expose: Major Indian Private Sector Banks, HDFC Bank, ICICI Bank and Axis Bank, Are Blatantly Running A Huge Nation-wide Money Laundering Racket
New Delhi: A Cobrapost pan-India undercover investigation spanning several months, unearths a vast, nation-wide money laundering racket being run by HDFC Bank, ICICI Bank and Axis Bank.
The brazen criminal activity by these banks is channelizing vast amounts of black money into the regular banking system as laundered white money.
Our investigation, conducted across dozens and dozens of branches of these banks and their insurance affiliates, across all five zones of the country, revealed these shocking facts:
That these money laundering practices are part of a standard set of procedures within these banks;
* These money laundering services are being openly offered to even walk-in customers who wish to launder their illicit money;
* A variety of options for laundering ill-gotten cash are being offered brazenly;
* These money laundering services are being offered practically as a standard product across the country.
This huge money-laundering racket being run by these banks has been captured by Cobrapost, on video-tape, running into hundreds of hours. The evidence is graphic, crystal-clear and clinching.
The investigation finds the banks and their managements systematically and deliberately violating several provisions of the Income Tax Act, FEMA, RBI regulations, KYC norms, the Banking Act and Prevention of Money laundering Act (PMLA) with utter disregard to consequences, driven by their desire to boost cheap deposits and thereby increasing their profits.
It puts a big question mark on the legitimacy of these banks’ deposits and therefore their profits. It also raises grave questions of the legitimacy and origins of funds being raised in their insurance and investment arms. It is also clear from our investigations that these banks have been indulging in these criminal practices for several years and have well-oiled processes for the same.
Covered in this investigation, codenamed Operation Red Spider, are three leading private sector banks, namely, HDFC Bank, ICICI Bank and Axis Bank.
What were Cobrapost’s methods to unearth this scam?
It took just a cold call by the Cobrapost reporter to the branches of the banks, mentioned above, to put a grossly illegal proposition on the table: A politician wants to launder a huge sum of black money. The purpose: make it white. Would the bank officials help? And the lid came off the murky world of money laundering in the Indian banking sector, as the officials of these banks rolled out the red carpet for our Associate Editor Syed Masroor Hasan.
Taking an alias of Rajeev Sharma, Masroor visited dozens and dozens of branches across the length and breadth of the country, including many major cities and state capitals, across all five zones. Nowhere was he disappointed. Nowhere was he turned away. Almost every banker that he came across was willing to help launder the black money of the fictitious politician Masroor was supposedly working for. The discussions on how to launder the money went up the management hierarchy.
How these banks launder black money
* The ways these major banks suggested to transform the black money into white were both imaginative in their range and brazen in their approach. This brought to the fore a modus operandi that is tailored to rake in vast amounts of black money in the form of illegal deposits, insurance and investment products, sold by these banks. All these creative means make the dirty money squeaky clean without the regulatory authorities ever getting a whiff of what they are doing. Here is a gist of what the various bankers suggested to help the politician launder his illegitimate money:
* Accept huge amounts of cash and invest it in insurance products and gold.
* Open an account to route the cash into various investment schemes of the bank.
* Do it even without the mandatory PAN card or adhering to the KYC norms laid down by RBI.
* Split the money into tranches to get it into the banking system without being detected.
* Use “benami” accounts to facilitate the conversion of black money.
* Use accounts of other customers to channelize the black money into the system for a fee.
* Get demand drafts made for the client either from their own banks or from other banks tofacilitate investment without it showing up in the client’s account.
* Keep the identity of the investor/depositor secret.
* Open multiple accounts and close them at will to facilitate the investment of black money.
* Invest black money in multiple instruments in the names of different individuals, notnecessarily drawn from among the family.
* Allot lockers for the safekeeping of the illegitimate cash, including special large size lockers to accommodate crores of hard cash.
* Personally come to the residence of the client to take the black money deal forward and collect the cash, even bring along counting machine.
* Use provisions like Form 60 to deposit the illegitimate cash into the account to route it into investment.
* Help the client to transfer black money abroad through NRE (Non-Resident External)/NRO (Non-Resident Ordinary) account; transfer the money telegraphically or through means other than regular banking procedures.
Other than these, officials suggested further innovative methods unique to their banks. For instance, HDFC Bank’s officials offer such convenient cash laundering services like the operation of lockers (with cash in them) outside regular banking hours to ensure the secrecy of these customers’ identities and to mask the nature of the transactions. To stay one step ahead, ICICI Bank officials were ready to make a suitable profile for the client, such as showing him as an agriculturist or engaged in some business, so as to make the investment unquestionable. On the other hand, Axis Bank officials proved to be a notch above in inventing fraudulent means. Use “sundry” accounts of the bank, they suggested, to deposit all the illegal cash from where it is to be routed into investment. Either use accounts of other customers, for a fee, to transfer money abroad, or use some shell company and take away a chunk of foreign currency as expenses toward business-cum-leisure trips. They would pamper you, offering you privilege banking or priority banking, pulling out all stops to make the deal happen.
Operation Red Spider exposes the alarmingly lax and ineffective regulation of our Banking and Insurance Industries
Operation Red Spider makes it clear that the agencies entrusted under law to have an oversight over the banks, namely, the RBI, the Income Tax Department, Directorate of Revenue Intelligence, the Enforcement Directorate and various economic offences wings, have been grossly inefficient in unearthing misconduct on the part of the banks. It took a single reporter equipped with a low-end hidden camera, to unearth these endemic money laundering practices in HDFC Bank, ICICI Bank and Axis Bank: by merely posing as a walk-in customer wanting to launder huge sums of cash for a politician.
The interactions between officials of the banks and the reporter clearly brings out the connivance of senior management of these banks in facilitating money laundering and other illegal transactions. Operation Red Spider clearly establishes that the senior management of these banks has compromised all standards of governance, and brazenly breaking the law by offering these money-laundering services practically as a nation-wide product. It becomes very clear through the Cobrapost investigation that all that matters to these banks’ managements is to increase the bank’s access to cheap deposits, thereby boosting their profits vastly, even if the money thus accessed is criminal and shady.
Cobrapost has hundreds of hours of raw video footage pertaining to the reporter’s interactions with personnel from the above-mentioned three banks. Cobrapost is willing to hand over the footage to any authorized law enforcement agency that wants to look into the matter.
Cobrapost has undertaken dozens of investigations (including Operation Duryodhana: the cash for questions scam which led to the dismissal of 11 Members of Parliament) over the past 10 years and has been submitting unedited tapes to authorities whenever asked for. No agency has ever raised any questions as to the genuineness of evidence presented by Cobrapost.
When confronted with irrefutable evidence, the PR spin machines of the banks are likely to go into over drive and claim that “these cases are aberrations and isolated”, or that “the tapes are doctored”, or that “we will look into the matter and take action”.
Let all parties be assured that nothing in Operation Red Spider is fabricated. The camera is a mechanical witness and it has captured the words and actions of the bankers with great clarity. These banks can be called criminal syndicates for what their managements are willing to do to improve the bank’s bottom line.
The hundreds of hours of video footage clearly establish that these cases are not aberrations at all. In fact, to the contrary, they are the norm, across all five zones, major cities, spanning the length and breadth of a large country like India.
Furthermore, these managements themselves are complicit in these criminal activities, and hence, to allow them to investigate this scam will only result in the destruction of evidence and a cover up of their tracks. No fair investigation can happen with the same people sitting at the helm of affairs.
We further need to have the debate again whether private entities should be given banking licenses and whether those that have them deserve them or the country is better served with their licenses being cancelled. For, as things stand, as demonstrated by the conduct of HDFC Bank, ICICI Bank, and Axis Bank (the country’s leaders in banking), perhaps the country might be better served by private banks not being on the banking canvass.
Finally, Mr. Chidambaram, our Finance Minister, has been speaking extensively about the cancer of money laundering and tax evasion in our system. The onus is now on the government to act swiftly, and get its investigative and enforcement agencies, including the CBI, to launch an investigation without even a day’s delay. Any delay will result in evidence like incriminating emails being destroyed (there are bank officials who have been caught on tape, saying that they routinely email seniors for approval/information on these illegal transactions), and cash being removed from lockers, customer identities being altered, etc.
The whole country has been looking at the Swiss banks with suspicion as being the main repositories of black money belonging to Indian residents.
As this path-breaking Cobrapost investigation starkly reveals, it is our very own, home-grown Indian banks that are the primary culprits in this giant racket.
For more details log onto www.cobrapost.com.
Case:1, HDFC Bank
HDFC BANK, CASE 4: N. MAHAJAN, SENIOR MANAGER; SHABEE, SALES DEVELOPMENT MANAGER, SOUTH DELHI
HDFC BANK, CASE 5: M. FAISAL, DEPUTY MANAGER; A.R. MIGLANI, BRANCH MANAGER, WEST DELHI
HDFC BANK, CASE 6: A. KAR, BRANCH MANAGER, KOLKATA, WEST BENGAL
HDFC BANK, CASE 7: V. K. TANDON, BRANCH MANAGER, RETAIL BANKING; NAVNEET, FARIDABAD, HARYANA
HDFC BANK, CASE 10, A: PANDEY, BRANCH MANAGER, GHAZIABAD, UTTAR PRADESH
HDFC BANK, CASE 13: S. SHARMA, BRANCH MANAGER, HDFC STANDARD LIFE INSURANCE, SOUTH DELHI
HDFC BANK, CASE 15: A.G. TOPPO, SENIOR MANAGER,KOLKATA, WEST BENGAL
HDFC BANK, CASE 16: A. SRIVASTAVA, INVESTMENT BANKER; H. SINGH, ASSISTANT BRANCH MANAGER,WEST DELHI
HDFC BANK, CASE 17: J. BAJAJ, BRANCH MANAGER; N. SHARMA, FARIDABAD, HARYANA
HDFC BANK, CASE 18: VENKATESWAR RAO, BANK ASSURANCE OFFICER, HYDERABAD
HDFC BANK, CASE 21: CHAMPA G, ASSISTANT MANAGER; SHIVRAJ, BANGALORE, KARNATAKA
HDFC BANK, CASE 22: SUDESHNA, INVESTMENT BANKER; ZIBRAN, ASSISTANT MANAGER, KOLKATA
Case:2, ICICI Bank
ICICI BANK, CASE 1: V. SRIVASTAVA, PRIVILEGE BANKER, CENTRAL DELHI
ICICI BANK, CASE 2: R. GUPTA, BRANCH MANAGER, ICICI PRUDENTIAL, AGRA
ICICI BANK, CASE 4: N. KUMAR, BUSINESS MANAGER; AASTHA, DEPUTY BRANCH MANAGER, NOIDA, UTTAR PRADESH
ICICI BANK, CASE 8: K. R. RAO, KEY RELATIONSHIP MANAGER, ICICI PRUDENTIAL, HYDERABAD, ANDHRA PRADESH
ICICI BANK, CASE 9: R. SHARMA, BRANCH MANAGER, FARIDABAD, HARYANA
ICICI BANK, CASE 14: A. PATHAK, ICICI LOMBARD, MUMBAI, MAHARASHTRA
ICICI BANK, CASE 15: A. DUBEY, ASSISTANT MANAGER, WEST DELHI
ICICI BANK, CASE 16: J. DWIVEDI, INVESTMENT MANAGER; N. GHOSH, OFFICER, FARIDABAD, HARYANA
ICICI BANK, CASE 18: GANPATHI R., BRANCH MANAGER, HYDERABAD, ANDHRA PRADESH
ICICI BANK, CASE: 20, A TANDON, BRANCH SALES MANAGER, SOUTH DELHI
ICICI BANK, CASE: 21, N.S. NANDI, INSURANCE ADVISER, GHAZIABAD
ICICI BANK, CASE: 22, REHAAN, ASSISTANT MANAGER, SOUTH DELHI
ICICI BANK, CASE: 23, B MISHRA, MANAGER (SALES OPERATION), EAST DELHI
Case: 3, Axis Bank
AXIS BANK, CASE 2: N. CHOPRA, ASSISTANT MANAGER, KOLKATA, WEST BENGAL
AXIS BANK, CASE:10, K. MALLELA, ASSISTANT VICE PRESIDENT, HYDERABAD
AXIS BANK, CASE: 14, VS REDDY, ASSISTANT VICE PRESIDENT, HYDERABAD
AXIS BANK, CASE:15, RP NAIR, ASSISTANT VICE PRESIDENT, CHENNAI
