An infamous bank fraud of huge amount was detected in February, 2018 in India. The Bank suspended 10 officers over the scam and referred the matter to Government of India’s top investigative agency. The Bank in a letter warned the other banks by revealing the modus operandi used by the bank officials.
It was found that none of the transactions were routed through the CBS system, thus avoiding early detection of fraudulent activity. In case of LoUs, it has been found that at the time of issuing LoUs for a smaller amount by SWIFT, the transaction was routed through the CBS system but subsequently, amendments were made in these LoUs by substantially enhancing the amount of LoUs and transmitted through SWIFT without routing these enhancements through CBS.
LoUs were opened in favour of overseas branches of Indian banks for import of goods for a period of one year for which as per Reserve Bank of India guidelines, the total time period allowed is 90 days from the date of shipment.
When fraudster companies asked for LoUs for raising buyers’ credit after the retirement of the Bank employee involved in the scam, the Bank sought 100 per cent cash margins for issuing LoUs . Thus fraud came to light.
There are few Credit Information providers in the country who are on the panel of banks. Mira Inform is one of them having existence of over 36 years, providing real-time credit information to several hundred clients in and outside India.
During 2011-16, there were 38 credit opinion reports prepared by Mira Inform for this banks on fraudster overseas entities. Findings in all those reports were negative and unfavourable but perhaps, these were ignored, overlooked or removed from the bank’s records. Hence, investigative officers asked us to issue the duplicate copy of each report. Mira Inform has spontaneously provided all the copy of past reports prepared for this fraudster companies.
The concerned department was astonished to find all 38 accurate reports which were prepared and provided to the bank for their foreign exchange transactions of the referred fraudster companies. The concerned investigative officer was impressed with Mira Inform’s high quality reporting and as if he said that the country and bank could have saved several thousand crores of rupees based on Mira Inform’s credit opinion reports.
Following message of an investigative officer has encouraged Mira Inform’s to do more and more ‘good work’
“We salute to the hard working and honest Indians who are contributing to Indian growth story by their dedication and zeal”.
The alleged huge forex scam stirred up a hornet’s nest for the India’s banking sector in the year 2015. It was alleged that a whopping few thousand crore black money was remitted from bank to Hong Kong camouflaged as payments for non-existent imports. The amount was allegedly deposited in 59 accounts in cash as advance for imports that never existed. In October, 2015, two top Government investigative agencies started investigating in the matter. It was alleged that the amount was deposited in 59 accounts of one of the bank’s branch in cash as advance for import and the money was sent to some select companies in Hong Kong. The bank’s branch opened 59 current accounts from May 2014 to June 2015 through which large foreign exchange remittances were made. Remittances were sent to Hong Kong and Dubai via banks, actual exports were sent to Afghanistan. In October, six bank officers were arrested on charges of criminal conspiracy, cheating under the Prevention of Corruption Act. The other four arrested include working with the foreign exchange division of a famous private bank.
There are few credit information providers in the country on the panel of various banks. Mira Inform is one of them.
During the period, 75 reports were sought by the bank from Mira Inform on Indian and overseas entities. Out of 75 reports, there were 72 negative reports submitted to the bank.
Asst. Director of the investigative agency sought soft copy of our past reporting done for this bank. While going through all the reports, he complimented Mira Inform team for their excellent job of producing high quality and accurate business information reports.
This is a real story of disappearing airlines in India. In 2011, this airlines had the second largest share of India’s domestic market. However, in 2012, the airlines closed. What went so wrong ?
Established in 2003, airlines was backed and owned by a large group based in Bengaluru. Despite being formed in 2003, it wasn’t until 2005 that the airlines took its first flight. By 2007, the airlines had grown its fleet to 20 Airbus A320s, operating a network that spanned 26 destinations. In September 2009, the airlines began its first long haul flights to London. At its peak, the airlines had a fleet of 69 aircraft, the bulk of which were A320 family planes although it also had 28ATR 42 and 72s as well as five Airbus A330s. The airlines placed orders with Airbus for five A350-800s and even for five giant A380 aircraft for intercontinental services. However, none of these aircraft were delivered.
On paper, the airlines was doing everything right. The aircraft were new and comfortable, the food was reportedly decent, there was inflight entertainment and first class, there were even acceptable lounge facilities for premium passengers.
The real turning point came about in 2007 when this airlines bought a small domestic airline. 2008 brought with it a global financial crisis which made things at airlines ever harder to deal with. By 2010, it had cut its fleet down to just 28 aircraft and was starting to haemorrhage money. Payments to employees and creditors started to fail and CEO himself had to pump money into the airline to keep it afloat.
On 20th October 2012, the airline’s license was suspended by the Government agency. It limped on in a state of bankruptcy until finally, on March 2nd 2016, the consortium of banks moved to recover its dues which included a sum of Rs 90000 million owed by CEO himself. He had fled to UK to escape his creditors. Despite an extradition effort by the Indian government to return him to the country, he remains at large, branded a ‘fugitive economic offender’.
Mira Inform has most of overseas insurance companies as clients. It had Credit Opinion requests from foreign insurance companies since the airlines was importing oils, spare, components and even aircrafts. The airlines brand was well received and a liberal public sector bank also gave about Rs 6000 mil. just against the brand which has no value today. Throughout its short career, airlines never turned a profit. In some ways this is expected from a start-up airline but as time went on, the debt grew deeper and CEO and his team did nothing to turn the things around which was advised/informed in each Mira Inform’s report, prepared subsequent to 2006. The airlines failed to understand the functioning of key pressure points, both revenue and cost drivers and the need of capital to be able to withstand external shocks. It had bank loans exceeding Rs 70000 million at that time.
Insurance companies debated a lot against Mira Inform’s moderate and poor rating for this airline since early days. Some even scolded it’s analyst team and argued that rating/scoring is inadequate and not matching with its’ huge brand value. However, every time justification were made for below normal or moderate rating and suggested secured dealings which was not acceptable to most of Mira Inform’s clients. Ultimately, the consortium of banks, insurance companies, employees, suppliers and vendors lost heavily and so far failed to recover a single penny. Mira Inform team did their best and could see disappearing this airlines in thin air.