M A I N   N E W S

Citibank Fraud
Hero group’s CFO arrested
Sanjeev Sharma/Sunit Dhawan
Tribune News Service

Gurgaon/New Delhi, Jan 3
In the second arrest related to the unfolding Citibank fraud, the Gurgaon police today arrested Sanjay Gupta, a senior official of the Hero group. Gupta was produced in a local court, which remanded him in five-day police custody.

The arrest of a senior finance official of one of India’s largest corporate houses is in itself a rare event. And the arrest in the Citibank episode suggests there was a wider conspiracy and the fraud was not limited to just one individual -Shivraj Puri. The Hero group said after the arrest that it was a victim.

Gurgaon Police Commissioner SS Deswal told The Tribune that Gupta was an accomplice of Citibank relationship manager Puri, who had defrauded several individual and corporate clients of the bank of more than Rs 300 crore.

Gupta was functioning as associate vice-president (AVP) accounts of Hero Corporate Services, an arm of the Hero group. Sunil Kant Munjal heads Hero Corporate Services. “As chief financial officer of the Hero group, Gupta’s responsibility was to ensure that the company’s money was invested in safe and sound ventures. However, information gathered during the course of our investigations indicates that he got his company’s funds invested in dubious plans forged by Puri in return for abnormal commission,” Deswal said.

The Police Commissioner maintained that Gupta also used to rope in the financial officials of other companies in “shady” deals masterminded by Puri, who used to pay him kickbacks.

According to informed sources, the amount paid by Puri to Gupta for his favours ran into crores of rupees. Deswal, however, refused to name a definite amount, stating that a clearer picture would emerge after the five-day remand. In a statement issued today after Gupta’s arrest, the Hero group said it was a victim. “Hero Group is committed to fully cooperate with the authorities investigating the alleged Citibank fraud case. As a victim, our prime priority is to recover our investments. As the matter is under investigation by relevant authorities, we don't wish to comment further at this stage,” said the statement.

Gupta’s arrest comes days after Puri surrendered in a local court. Apart from the Gurgaon police, special teams from the Securities and Exchange Board of India (SEBI) and Reserve Bank of India (RBI) are also examining the case. The Gurgaon police has also questioned officials of two brokerages, Religare and Bonanza, through which Puri was making stock market transactions.

It is learnt that the scope of the investigation, which started with the one Citibank relationship manager being probed, has now been widened. Sebi is probing whether these funds were being routed to the stock market to rig some stocks and also whether unaccounted and black money was being routed through these transactions.

There are indications that high net-worth (HNIs) clients who invested in schemes designed by Puri may have known that he was acting in a personal capacity.

Puri allegedly promised them high returns through special schemes but then diverted their money into the stock market through accounts opened in the names of his family and friends.

The executive, working in the bank’s Gurgaon branch, allegedly used a fake SEBI letter to dupe customers into putting money into accounts he created in his relatives’ names.

The police said Puri used the fake SEBI letter to convince customers to part with their money with the promise of good returns. The investigation team has checked with SEBI, which denied issuing any such letter.

A number of individual as well as corporate clients, including Hero, suffered substantial losses in the scam.