| Posted on: 2012-01-01/22:35:37 | India - Fraud & Cyber Crime News | Bank Complaints/ |
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The Rs 400-crore fraud unearthed in Citbank's Gurgaon branch in December 2010 could have been averted if the bank staff had taken the warning signals seriously, according to an internal investigation carried out by the bank. The probe report, a copy of which is with TOI, reveals that some suspicious transactions by alleged scam mastermind Shivraj Puri were detected way back in 2008, but no substantial action was taken. Citi Security and Investigative Services (CSIS), a security and investigative team that protects the assets, integrity and reputation of the bank had submitted a detailed investigation report in May, almost five months after the scam was detected. Responding to a detailed questionnaire, a bank spokesperson stated, "Citi has been cooperating with the regulators and the investigating agencies and will continue to do so, to bring the perpetrators of this fraud to justice. Since the matter is still under investigation and is subjudice, Citi will not be able to provide further comments at this stage." The CSIS report mentions that during investigations of Puri's fraudulent activities in 2010 it was disclosed that in May 2008 unusual activity within the staff accounts of Puri and his wife Nidhi was identified by the bank's fraud risk management unit through the banking early alerts tracking system. The internal investigation records that the alert was referred to managers in the Gurgaon branch. "Several officials in the bank were aware of this and were involved in email discussion. However, the investigation and disciplinary process appeared disjointed and uncoordinated. No single party appears to have taken responsibility for resolving the issue. Instead the assumption appears to have been widely held that someone else was or should have been responsible. The end result was that no formal action was taken," the report states. MISSED SIGNALS May 2008: Unusual activity within staff accounts of scam main accused Shivraj Puri and his wife Nidhi identified by Citibank's fraud risk management unit Alert referred to Gurgaon branch managers. No action taken despite email discussions June 2008: Compliance officer Joginder Singh recommended stern action against the errant employees. Cases should have been referred to country disciplinary committee, but weren'tNov 2008: Fresh alert forwarded to Citi Security and Investigative Services. Puri was questioned but no action was ever taken SERIOUS LAPSES WITHIN BANK' An internal investigation into the multi-crore Citibank scam has shown that there were serious lapses within the bank that was responsible for one of the country's biggest fraud involving a multinational bank. The bank and its staff had either failed to detect or ignored the illegal activities of its relationship manager Shivraj Puri. The Citi Security and Investigative Services report with TOI found that a full review of the account was not triggered even though about Rs 405 crore flowed through a savings account. PURI WAS ONLY VERBALLY WARNED The fraud in Citbank's Gurgaon branch in December 2010 occurred despite several warnings, according to an internal study by the bank. On June 20, 2008, Joginder Singh, Citibank's compliance officer had even recommended to officials to take stern action against the errant employees. The cases should have been referred to CDC (country disciplinary committee), but this was not done. A fresh banking early alerts tracking system (BEATS) alert linked to Puri's staff account was forwarded to Citi Security and Investigative Services (CSIS) for review in November 2008 relating to the use of loan on phone (LOP) proceeds and transfers between his mother's and his staff account. He was also asked why funds were being diverted from Prem Nath's account -which was used to route Puri's investors' cash to the brokerage firms -to his mother's account and then directly to Puri's staff account. These issues were never taken to a logical conclusion . The CSIS report says that it's apparent, "The business was aware of significant suspicious and unauthorized activities by Puri on two separate escalations, involving the use of his staff account for investment purposes. Compliance, anti-money laundering (AML), HR, operations and technology, consumer banking head and Puri's immediate and other branch management were also aware of Puri's unauthorized activities in violation of Citibank policies." It further states that Puri was only verbally warned but he continued to conduct unauthorized activities.Incidentally, Puri has also moved Punjab and Haryana HC seeking further investigation by CBI. The case comes up for hearing on January 4. |
| Source: E T | Location : Delhi |
