The accused opened four offices in different localities in Hyderabad and defrauded people from the UK and the US by promising to sanction loans for them if they paid certain charges
Hyderabad: An international loan racket conducted from the city was busted with the arrest of six persons who allegedly cheated people from the UK and US by offering them loans, police said, reports PTI.
Accused Atiq Ababs, Syed Abdul Basith, Niranjan Reddy along with three of their associates had opened four offices in different localities in Hyderabad and defrauded people from the UK and US by promising to sanction loans for them if they paid certain charges, Hyderabad Police Commissioner Anurag Sharma told reporters.
The accused used to collect data of those looking to obtain loans from their sources in UK through one Simran Veer Singh of Delhi and some others from Pune, Sharma said.
Once the data was received here, the staff would call up loan seekers pretending to be call centre employees of a financial institution and trap them, the Police Chief said, adding, the people seeking loan were then asked to pay fee ranging from 120 to 210 pounds or $200 or more depending on the loan amount.
"They were promised that their loans would be sanctioned within half-an-hour after depositing 'fee' in particular bank accounts. However, the loan was never granted and the customers were again asked to make more payments for approval of the loans," Sharma explained.
The accused were engaged in this fraud since October 2011 and police seized 80 computers from their offices here, he said.
They had employed over 30 staff who were given an alternative western name and told to speak to loan seekers in western accent on VOIP as if they were calling from UK/US and they were collecting around 40,000 Pounds per month from UK and over $1,50,000 per month from the US, the CP said.
"The accused will be interrogated further as we want to gather details about their bank accounts and involvement of other accused," Sharma added.
High Mark does not have a full-time director or managing director and its chairman Prof Pandya is working on a part-time basis. This is clear violation of Regulation 9(2) of the CICR Act
Troubled and cash strapped High Mark Credit Information Services Pvt Ltd, (High Mark Credit Bureau) licensed and supervised by the Reserve Bank of India (RBI), is alleged to have violated existing rules and regulations while appointing its chairman. According to sources, it violated Credit Information Companies Regulations (CICR) Act, 2005 (CICRA) as well as Companies Act, while appointing Prof Dr Anil Pandya as its executive chairman. The issue was first raised by Siddharth Das, former Chief Operating Officer (COO) of High Mark, before the company board. But the board apparently ignored it. Subsequently, Das sent a legal notice raising this issue. Ajay Kohli, former chief executive of High Mark, tried to bring this to the attention of the board. This too has been ignored so far.
High Mark is the only bureau started by individuals. Prof Pandya, whom the board designated as the executive chairman, and Anuj Desai started the business with nominal capital. While Prof Pandya continued to be a tenured full Professor at the College of Business, Northeastern Illinois University in Chicago, and an Adjunct Professor at Northwestern University Kellogg Graduate School of Management, he was also appointed as executive chairman at High Mark.
While High Mark never appointed Prof Pandya on a whole-time basis, he was able to continue teaching in the US as well was working with the credit bureau on a part-time basis. As per the CICR Act, when a credit bureau appoints chairman on a part-time basis, it then must have a managing director or full-time director to look after the management and affairs of the bureau.
Here is what CICR Act, 2005 says:
9. Management of a credit information company —
(1) Notwithstanding anything contained in any law for the time being in force, or in any contract to the contrary, every credit information company in existence on the commencement of this Act, or which comes into existence thereafter, shall have one of its directors, who may be appointed on whole-time or on a part-time basis as chairperson of its board, and where he is appointed on whole-time basis as chairperson of its board, he shall be entrusted with the management of the whole of the affairs of the credit information company:
Provided that the chairperson of the board of the credit information company shall exercise his powers subject to the superintendence, control and directions of the board.
(2) Where a chairperson is appointed on a part-time basis, the management of whole of the affairs of the credit information company shall be entrusted to a managing director or, a whole-time director by whatever name called, who shall exercise his powers subject to the superintendence, control and directions of the board.
(3) In addition to the chairperson or managing director or whole-time director, by whatever name called, the board of directors shall consist of not less than 50% directors who shall be persons having special knowledge in, or practical experience of, the matters relating to public administration, law, banking, finance, accountancy, management or information technology.
(4) In discharging its functions, the board shall act on business principles and shall have due regard to the interest of its specified users, credit institutions or the clients or borrowers of credit institutions
(5) Where the Reserve Bank is satisfied that it is in the public interest or in the interest of banking policy or credit system of the country, or for preventing the affairs of any credit information company being managed in a manner detrimental to the interest of banking policy or credit institutions or borrowers or clients or for securing the proper management of any credit information company, it is necessary so to do, the Reserve Bank may, for reasons to be recorded in writing, by order published in the Official Gazette, supersede the board of such company, for such period not exceeding six months, as may be specified in the order and which may be extended from time to time, so, however, that the total period shall not exceed twelve months :
Provided that before making any such order, the Reserve Bank shall give a reasonable opportunity to the board of such credit information company to make representation against the proposed supersession and shall consider the representation, if any, of the board.
(6) The Reserve Bank may, on supersession of the board of a credit information company under sub-section (5), appoint an Administrator for such period and on such salary and other terms and conditions as it may determine.
(7) The Reserve Bank may issue such directions to the administrator as it may deem appropriate and the administrator shall be bound to follow such directions.
(8) Upon making of the order under sub-section (5), superseding the board of a credit information company—
(a) the chairperson, managing director and other directors of such credit information company shall, as from the date of supersession, vacate their offices as such;
(b) all the powers, functions and duties which may, by or under the provisions of the Companies Act, 1956 (1 of 1956) or this Act or any other law for the time being in force, be exercised or discharged, by or on behalf of the board of such credit information company, or by a resolution passed in the general meeting of that company, shall, until the reconstitution of its board under sub-section (10), be exercised and
discharged by the Administrator appointed by the Reserve Bank under sub-section (6):
Provided that the powers exercised by the Administrator shall be valid notwithstanding that such powers are exercisable by a resolution passed in the general meeting of such credit information company.
(9) The salary and allowances payable to the administrator and staff assisting the administrator shall be borne by the credit information company.
(10) On and before the expiration of two months before expiry of the period of supersession mentioned in the order of the Reserve Bank issued under sub-section (5), the administrator of the credit information company, shall call a general meeting of the credit information company to elect new directors and reconstitute its board and any person who had vacated his office under clause (a) of sub-section (8), shall not be deemed to be disqualified for re-appointment.
(11) Notwithstanding anything contained in any law for the time being in force or in any contract or the memorandum or articles of association, of the credit information company, on the removal of a person from office under this section, that person shall not be entitled to claim any compensation for the loss or termination of office.
High Mark never appointed Prof Pandya on a full-time basis. The prefix ‘Executive’ before chairman was supposed to give the impression that he is a full-time employee in the nature of a CEO. Even as Prof Pandya continues to work on a part-time basis, the credit bureau also did not appoint any whole-time director or managing director. This clearly violates Regulation 9 (2) of the CICRA for which the board should be made responsible.
On 4 October 2012, High Mark’s former COO, Siddharth Das sent a legal notice to the company demanding his dues. He also alleged serious violation of the CICR Act in the appointment of Prof Pandya as executive chairman.
Following the notice, High Mark’s CEO Kohli sent an email on 18 December 2012 to the company’s board of directors urging to deliberate in the alleged violation of CICR Act and Companies Act. “It is evident that Prof Dr Pandya was never appointed on a whole-time basis and continues to work on a part-time basis. As the company does not have any other whole-time director or managing director, regulation 9(2) seems to have been clearly violated. Das has already threatened to take this issue to Court as well as the RBI. Even if he does not, I feel it is my professional and moral duty to point out the illegality being committed by the Company to the Board for appropriate action to remedy the violations,” Kohli said in his email to the Board.
He said, “…there are only two options to cure the illegality for the future. Either Prof Dr Pandya should resign from the position of Executive Director or the Board should appoint a whole time director. This needs to be done as soon as possible as otherwise, the RBI License would be under threat of cancellation/suspension. Legal advice should be sought as to the action to be taken for the past non compliance.”
As per Regulation 9(5), the Reserve Bank of India (RBI) can supersede the company board for failing to follow Regulation 9(2) and also may cancel or suspend licence of High Mark. But so far nothing of this sort has happened.
One of the independent directors of High Mark is Vepa Kamesam, a former deputy governor of the RBI. Incidentally Mr Kamesam was one of the four directors who along with Prof Pandya bagged 70% of the employee stock ownership plan (ESOP). Mr Kamesam was allotted 1.63 lakh shares in the credit bureau as ESOPs. There is no evidence that Mr Kamesam has been perturbed by this alleged violation of the CIRC Act and the possible action by the RBI. Of course, it remains to be seen whether the RBI will act at all.
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