Cobrapost exposes money-laundering racket in 23 entities including SBI and LIC
Moneylife Digital Team 06 May 2013

If any common man had been caught on phone or tape professing to do money laundering activities, can you imagine what might have happened to him? He would immediately be put into the jail and suffered 100% capital erosion

Twenty-three major Indian banks, both public and private, and insurance companies, are running a nation-wide money laundering racket, blatantly violating the laws of the land. And the culprits being exposed this time are Life Insurance Corp of India (LIC), State Bank of India (SBI), Bank of Baroda (BoB), Punjab National Bank (PNB), Canara Bank, Indian Bank, IDBI Bank, Yes Bank, Federal Bank, Reliance Capital, Birla Sunlife and many others, who together manage assets worth thousands of crores of rupees and have equally staggering deposits at their disposal, says Cobrapost.

 

Cobrapost said in the course of its undercover investigation, it came face to face with some shocking, stark realities about the functioning of the entire banking and insurance industry of the country. “Our interaction with all officials, some with the ranks of divisional manager, territory manager, assistant general manager and vice presidents, with scores of branches under their charge, bears it out clearly that they are conducting their questionable business with nonchalance that only crooks show when they find they are above law or when they find the powerful are on their side,” it said.

 

“In some cases, we came across certain bankers who were plain crooks in the mould of bankers. For instance, we have a senior manager of Federal Bank who without blinking an eye says, ‘Uske liye to hawala kar deta hoon (I can have a hawala [transaction] done for that),’ when we seek his help to send England some of the crores to some of the relatives of ‘our minister’s’ wife,” Cobrapost added.

 

In one particular case, Cobrapost found out how S Sake, a minister from Andhra Pradesh, provided guarantee for the safety of black money investment in a real estate project. “In his zeal to net client with deep pockets as our to-be-found-nowhere minister who could put on his table Rs25 crore of unaccounted cash, Manohar (R Manohar, assistant general manager of Indian Bank at South Delhi branch) guided Cobrapost investigative journalist, Syed Masroor Hasan, to Dr H Prasad, an orthopedic surgeon from Tirupati who wanted our minister to invest his crores of black money in his real estate project”.

 

“We are invited to Hyderabad where we meet Vasu, a hawala operator, who claims to be a former Andhra cop. He would help us deliver Rs 25 crore to Dr Prasad at Tirupati for his project through is racket. Our next port of call is S Sake, who is Minister of Primary Education with the Andhra Pradesh government, with nine other departments under his charge, which shows the power he wields. Sake stands guarantor for the safety of our black money investment in Dr Prasad’s real estate project. This helps us uncover a nexus between the banker and the hawala kingpin who are running their racket without any fear of law, with active patronage of our political masters,” Cobrapost said.
 

The Nexus between banks and insurance companies:

 

Another fact that comes to the fore, from the Cobrapost investigation is a nexus between the banks and the insurance companies. If the banks do not have their own insurance companies, they have joint ventures with private insurers. “Yes Bank, for instance, has a tie-up with Bajaj Allianz, which would question an investor only when the investment crosses Rs1 crore, as we came to know from a Yes Bank official. And such investments can be done in cash. Whenever we went about proposing to bankers, public or private, that we wanted to invest our black money in insurance, they immediately called the managers of the their insurance associates to our presence or sought their advice on phone, making it amply clear that banks and insurance companies are hand in glove,” it said.

 

Operation Red Spider 2 (from Cobrapost) establishes that money laundering is not confined to private banks, and is not an aberration, as is being made out in certain quarters in the wake of the first expose on 14 March 2013 in which HDFC Bank, ICICI Bank and Axis Bank were shown involved in money laundering. The scale is vast and unfathomable and the joke is that “In money laundering, there can be NO KYC done at all!” says Cobrapost.

 

Cobrapost’s observations on this common practice are as follows:

Money laundering practices are part and parcel of banking and insurance business across the board;

Even a walk-in customer can avail of such services that help him launder all his unaccounted cash;

Money laundering services are being offered openly as a standard product across the board.

 

According to Cobrapost, the defensive argument from the Reserve Bank of India (RBI), the Finance Ministry and the banks themselves has been that “there were only violation of KYC norms” and as such “no money laundering took place because no transaction took place”.

 

Knowing the woes of ordinary customers on KYC, Cobrapost asks, “If any common man had been caught on phone or tape professing to do these things (money laundering activities), can you imagine what might have happened to him?” Our answer is that the man may have even gone to jail and suffered 100% capital erosion.

 

The Cobrapost press release concludes that in addition, these transactions are not confined to a few low-level front-office staff members as is being made out in all the so-called ‘inquiries’. Interactions with all officials, some with the ranks of divisional manager, territory manager, assistant general manager and vice presidents, with scores of branches under their charge, bear it out clearly that they are parties to and facilitators for these transactions and are conducting their questionable business with nonchalance that only crooks show when they find they are above law or when they find the powerful are on their side.

 

Cobrapost is critical of the Finance Minister as well, in spite of his warning to money launderers and tax evaders that “we are watching you and will come after you.” Till date, no investigative agency has launched any investigation into the heaps of evidence submitted by Cobrapost, says the press release.

Comments
arun adalja
1 decade ago
till this moment finance ministry was sleeping and now asking rbi why no steps have been taken?1 crore penalty is very low they must fine 500 crores for this deed.for our small mistakes banks are charging 750 to 1000 rs.
uttamkumar dubey
1 decade ago
We really need to stop all evils.
Everybody please post/discuss/condemn/publicize all such incidents/peoples as many times possible.

Someday it will be heard and the next day onward ppl will fear to indulge into it.

uttam
ABHA CHAWLA MOHANTY
1 decade ago
COBRA POST SHOULD KNOW THAT INSURANCE SECTOR NON-LIFE IS RUN BY NAMES DROPPING ....WHO CAN., ONE FINANCE MINISTER COMBAT ?????
manoharlalsharma
1 decade ago
It is great and Breve to seen,sending messeges in public.
I wish some oe to come in the corridor of HOUSING SOCIETY COMMTEE what and how this becoming DON..and wanting to LOOT Plots of a AAM..AADMI with hand in glove of JOINT REGISTRARS.
Dayananda Kamath k
1 decade ago
it is really strange that so much fast action of suspending is taking place just based on loose talk by some employees in their effort to garner business and reach targets. but since last 10 years i have represented to every authority that matters in india about how violations of fema,import export policy, tax laws are being violated by a nationalised bank, where i brought out these things in discharge of my duty as internal auditor and punished for bringing out these irregularities and perpetrators are protected promoted and leading the banks that are now involved in this scam.the bank public have lost crores of rupees. even now they want to initiate action.
NSriramamurty
Replied to Dayananda Kamath k comment 1 decade ago
When you got Documentary Proof and Internal Audit Report with You, Best Way is file PIL in High Court- who are seriously Dealing with Economic Offences calling for Concerned Chiefs and Ministries o investigate and Report - and taking them to Logical Conclusions.SC recently warned CBI and GOI for Dilly-Dollying.Letters to Political Heads is not giving results.
ABHA CHAWLA MOHANTY
Replied to Dayananda Kamath k comment 1 decade ago
please WRITE OPEN LETTER TO F.M ....,PERHAPS,HE MAY START SEEING ...then....BELIEVING??....ODDS ARE.>
Dayananda Kamath k
Replied to ABHA CHAWLA MOHANTY comment 1 decade ago
i have sent open letter even up to the president of india even seeking permission to prosecute the concerned but no avail
ABHA CHAWLA MOHANTY
Replied to Dayananda Kamath k comment 1 decade ago
CAN NOT HELP TO CONCLUDE...HAND IN GLOVE????????????????
Arun Mehta
1 decade ago
"Cobrapost" stings have assured a short term(May be even a long term) work for all auditors,(internal/external) and forensic accountants,regulators et-al.
ABHA CHAWLA MOHANTY
Replied to Arun Mehta comment 1 decade ago
COBRA POST HAS MANAGED TO JOB PROFILING AND ASSIGNMENT OF POSTS ASSIGNED TO JOB....STATUS....,IS THERE VANGUARDS OF ADMINISTRATIVE VIGILANCE??????
arun adalja
1 decade ago
very good article and it is eye opening.every bank is doing wrong things and for small things they harass ordinary people.rbi dy governor says nothing wrong.then why did some officers suspended for this issue?
Krishnan
1 decade ago
In the regime of the shameless Govt. with guys like the author of the infamous Amnesty fame Chidambaram ( read the latest article by Mr.Jethmalani) and the most dishonest PM, witness the scams and the clumsy attempts at tampering with the report on Coalgate, under his very nose, what do you expect. Hats off to the dare devil courage of Cobra Post.Please continue the good work.
nagesh kini
1 decade ago
Yes, indeed the KYC "Kick/Kill" and not "Know" your Customer norms are stringently applied to poor illiterate migrant labourer to wants to remit home his meagre earnings to feed his starving wife and kids or a poor student living under a bridge to deposit financial assistance from charitable trusts that insist on paymentrs by a/c payee cheques.
Cobrapost has brought to light that crores of the rich and powerful can still be laundered and the RBI Dy. Gov. says "No scam has taken place."!
NSriramamurty
1 decade ago
Mr. Sailaja Nath ( S.Sake- as mentioned by Cobra Post ) Said Media that He only told Bank that Dr.Prasad is a Known Person to be given Loan to Dr.Prasad, when Dr.Prasad approached him to Put a Word to get loan to him.Atleast He agreed Openly about the Transaction.Thus CobraPost's revelations Looks Correct.
Then Why Dr.Prasad and Vasu, Hawala Operator,Hyderabad are not Prosecuted arresting them.when only Facts may come out. CBI,State CID/CDcid do not Proceed Unless they receive Orders from Govt.Police do not Proceed, Unless they get a Written Complaint to them.As NoBody Proceeds against Wrong Doers,So many Scams/ Daredevil Wrong-Doers are freely Happily wrong-doings. CBI could not Procced against AP Ministers in Jagan's case eventhough they found their Wrong-doings and Charged them but simply awaiting Govt.'s Sanction.Thus there is Grossly Wrong with our Rules and PM talks of Administrative Reforms for Decades, but do not do anything on Political Compulsions.All Rules should stipulate some Monetary Limites ,say Rs.1 or 10 Crores ,so that Invetigating Agencies can Proceed against Huge Amounts Wrong-Doers.
vns
1 decade ago
This is how our Govt headed by a great bookish Economist is managing our money with the help of Montek Ahluwalia who is ruling or ruining the finance management of this country for over 30 years and Sri Chidambaram for a better part of this period. The corruption has gone to the pore and core of every economic activity in this country. So easy and so quick free consultancy of how to launder black money and make this country's poor poorer by the day. It will be difficult for anybody to guess how many scams are going on in the country and all with the blessings of the Rulers. This is democracy of Corporate and Money making kind.
vns
1 decade ago
This is how our Govt headed by a great bookish Economist is managing our money with the help of Montek Ahluwalia who is ruling or ruining the finance management of this country for over 30 years and Sri Chidambaram for a better part of this period. The corruption has gone to the pore and core of every economic activity in this country. So easy and so quick free consultancy of how to launder black money and make this country's poor poorer by the day. It will be difficult for anybody to guess how many scams are going on in the country and all with the blessings of the Rulers. This is democracy of Corporate and Money making kind.
Arun Mehta
1 decade ago
One cannot imagine how the system will be abused once more Banks come into the game courtesy the new licenses and more insurance co's will use this new players to lure in the "Money-laundering customers to achieve their targets.The present regulatory mechanism will just not be able to handle the happenings.
uttamkumar dubey
1 decade ago
all these are suicidal.Now in this lawless state of the nation we are left with only one solution.Do or Die.Kill them or get killed.

Mr Government, aap kare to UPkar ham karen to "b*l*tkar"

ITs very sad and suicidal.Any independent body like judiciary do sth? presidents rule etc.?

Any Man in judiciary or Supreme-court or no man left in the nation other than kejriwal and supporters?
Dayananda Kamath k
Replied to uttamkumar dubey comment 1 decade ago
if the supreme court wants to initiate action, i have long back sent an open appeal to chief justice of india 'an open appeal to conscious of supreme court' about how every constitutional authority has failed in their duty,it can set up an sit and and initiate action against every authority and official involved. even copies were sent to leading news papers but nothing happened.
Vaibhav Dhoka
Replied to Dayananda Kamath k comment 1 decade ago
Nothing will ever happen as all are in same boat including judiciary.
Suiketu Shah
1 decade ago
HDFC Bank faces tough copmpetition but still they are far ahead of the pack!
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