Bat Routed Payments Via Itc Global

Documents available with Business Standard raise the question why BAT stopped making direct payments to ITC in India as it was doing prior to 1991 and decided to follow a circuitous route between 1991 and 1994. BAT executives, however, refused to comment until they were allowed to verify the documents authenticity.

The documents, on the basis of which the Enforcement Directorate has called BAT directors for questioning, suggest that while tobacco shipments to BAT were routed through India, the payment was routed through Singapore. A letter by M Rajagopalan, shipping manager of ITC Ltds Indian Leaf Tobacco Division, dated September 14, 1994, to Sriram Khattar of ITC Global Holdings (document 1) details the new procedure for exports and payments:

 

Based on shipping instructions from the customers, ILTD would prepare the contract and forward it to ITC Global;

On receipt of contract from ILTD, ITC Global would prepare a separate contract between ITC Global and the customers;

Shipping documents as per the customers requirement will be prepared by ILTD and these will be forwarded along with invoice raised on ITC Global, Singapore; and

ITC Global should release documents...and forward them to the customers as per the agreed payment terms with respective buyers.

BATs acceptance of the new procedure and its decision to agree to route tobacco purchases from ITC via ITC Global is evident from a telex by S H Beamish of BAT to R Ranganathan of ITC-ILTD document (no. II). BATs agreement to the new system is reinforced by yet another document no. III) a fax by Ajnanie Prasad from the shipping department of BAT to Shriram Khattar of ITC Global. It says, We understand from Mrs Caroline ... in the leaf planning department of BAT that they transferred US $5.2 million erroneously ... to Citibank Madras in favour of ITC-ILTD. I have already requested Caroline...to reroute the funds to Citibank Singapore branch ...

Yet another document (no. IV) from Amrit Bindra of ITC Global to VSN Murthy of ITC-ILTD suggests that the bills raised by ITC Global on at least one transaction of which evidence is available was 50 cents higher than the export price from India. This raises questions on the nature of invoicing which was executed by the various companies. BAT was aware of the goings-on in ITC Global and information that even the institutional directors did not have access to was being passed on to them. This is reflected in a letter purportedly written by AG (likely to be Ashutosh Garg) to Richard Pilbeam listing the current account dues between ITC and ITC Global document (no. V).