Six people, including two Bank of Baroda officials and an HDFC Bank employee, were arrested by the Enforcement Directorate and the Central Bureau of Investigation on Tuesday for alleged overseas transfer of Rs.6,172 crore to Hong Kong and Dubai, on the pretext of advance payment for import orders.
The CBI has arrested Ashok Vihar branch’s Assistant General Manager S.K. Garg and Foreign Exchange In-charge Jainish Dubey for allegedly facilitating the remittances, whereas the ED has arrested Kamal Kalra, Chandan Bhatia, Gurucharan Singh Dhawan and Sanjay Aggarwal on money laundering charges.
Drawing a distinction, the ED said its probe has revealed that it was a case of trade-based money laundering and not of black money stashed away abroad. Investigations revealed that the entire racket is being run by unscrupulous exporters who in order to avail of duty drawback incentives.
The exporters overvalue their goods and then send them to their conduits in the same country as that of the end buyer. The conduits pass on the goods to the end buyer, receive the genuine payment.
However, they pay back to the Indian exporters the inflated amount. This results in the deficit of funds on the part of the conduits.
To overcome the deficit, the same amount received by the exporters in India is pushed into the banking system by small undetectable deposits made by entry operators in a large number of bank accounts. Once it is in the banking channel, the total amount is brought into one back using current accounts of shell companies opened in a particular bank, like it happened in the case of the Ashok Vihar branch of Bank of Baroda.
