5 Execs, 4 businessmen behind Syndicate Bank 1,000 crore fraud

In a scam that can put to shame ace conman Natwarlal, four businessmen allegedly managed to open 386 accounts in three branches of Syndicate Bank in Rajasthan in connivance with five of its executives and defrauded it of Rs 1,000 crore using fake cheques, letter of credits and LIC policies.
The executives and the businessmen have been named in an FIR registered by the CBI after which it carried out searches today at 10 locations spread in three cities--Delhi NCR, Jaipur and Udaipur.
CBI registered the case against Satish Kumar Goyal, General Manager (then posted at Jaipur), Sanjeev Kumar, DGM, Regional Office, Deshraj Meena, Chief Manager, MI road Branch, Adarsh Manchanda, Malviya Nagar, all in Jaipur and Avdhesh Tiwari, AGM, Udaipur.

All these officials have been suspended by the Syndicate Bank and a complaint was filed with CBI on the basis of which the agency has registered the case.
In addition, a Udaipur-based chartered accountant Bharat Bamb, businessmen Piyush Jain and Vineet Jain from the same city and a Jaipur-based businessman Shankar Khandelwal have also been named in the FIR, the sources said.
The sources said these businessmen in alleged connivance with the bank officials resorted to discounting of fake cheques and bills against fake Letters of Credit and arranging over-draft limit against non-existent LIC Policies.

The scam that allegedly ran through 2011-16 continued unabated escaping the audits and throwing to the wind all the formalities of KYC norms as 386 bank accounts of various nature were opened in three branches--Malviya Nagar and MI Road in Jaipur and Udaipur--of the public sector bank, the sources said.

During the course of five years, large numbers of fake
cheques, LIC policies and Letters of Credit issued by different banks were used to avail cash from the branches of Syndicate bank, the sources said.
They said while opening many accounts documents submitted by genuine customers of different banks were used to open accounts in Syndicate Bank which were allegedly controlled by the perpatrators of the scam.
The CBI spokesperson said the transactions of fake cheques ranged from Rs 40 lakh to Rs five crore with maximum number of cheques in the range of Rs 2.5 crore to four crore.

Explaining the modus operandi, the sources said these people allegedly deposited fake cheques and get a discounted cash on them (For eg for the face value of Rs 100 cheque, they got Rs 90 cash immediately).
It is alleged that before the cheque bounced, they used to produce another cheque of higher face value and again get an discounted encashment with a portion of it used to write off against the previous fake cheque.
"To avoid detection, many of these transactions were nullified from the proceeds of new fraudulent transactions," the spokesperson said.
The sources said the scam of this magnitude shows systemic loopholes in the bank's operating system.

They alleged that such a large racket would have been impossible without the active participation of bank officials at various levels who ignored the massive scam.
It is not the first time, Syndicate Bank has come under CBI scanner as in 2013 its Chairman cum Managing Director S K Jain was arrested on alleged bribery charges.
CBI is tightlipped on questions whether officials at CMD level during 2011-16 had any knowledge about such a scandal.
It was only when Syndicate Bank realised gravity of the issue that the matter was recently referred to CBI for probe, they said.