New BoB chief says external agency to probe scams

Mumbai: P S Jayakumar, who today took charge as the MD and CEO of the scam-hit Bank of Baroda (BoB), said he will soon hire an external accounting agency to identify factors that led to the Rs 6,175-crore alleged forex scam and the Rs 350-crore bill discounting fraud at its two branches.

"We will be appointing an external accounting firm to see what missed our eyes such as KYC (know-your-customer) issues that led to these alleged scams," Jayakumar, a former Citibanker, told reporters here today after assuming charge.

He also said that by next week, the bank will present a report to its audit committee detailing developments relating to the forex transactions that are being investigated by CBI and the Enforcement Directorate.

"We attach a very high level of seriousness to the (corruption) issue. My goal is to work with the team and get the details," Jayakumar said, adding that "we have to make appropriate changes in our system and train people accordingly so that such things do not happen again".

On possible measures the bank will take internally, he said, "Over the next one week, we will submit a proper plan to the audit committee on the matter... we have to make appropriate changes to the processes, structure and training so that a repeat of such instance doesn't happen."

Prior to this, Jayakumar worked with the private sector.

BoB had remained headless for the past 14 months. The government had earlier appointed former chairman of Microsoft India Ravi Venkatesan as the bank's non-executive Chairman.

On long-to-medium term plans, Jayakumar said, "Over the next 90 days, we plan to draw up our future plan where we will articulate what we are going to do. This will coincide with the third quarter results." .

He said the bank has 2020 vision in place, which will be reviewed to see if it needs to be tweaked.

The former MD and CEO of VBHC Value Homes has assumed office at a time when the bank is facing two major crises -- one of alleged channelisation of a whopping Rs 6,172 crore of black money from its Ashok Vihar branch in Delhi to Hong Kong and another of a Rs 350-crore bill discounting fraud detected at one of its Ahmedabad branches.

First, the Rs 350-crore bill discounting fraud at its Ahmedabad circle came to the fore and last week, it emerged that there were suspicious transactions from its Delhi branch where US dollars equivalent to Rs 6,172 crore were remitted to a counter party in Hong Kong.

Between August 1, 2014 and August 12 2015, there were as many as 8,667 forex deals from the Ashok Vihar branch of the bank, prompting it to launch the probe.

Its internal audit found that forex business of its Delhi branch jumped a whopping 500 times to Rs 21,529 crore in 2014-15 over the previous year, in which it had reported a forex business of a paltry Rs 45 crore.

Meanwhile, ED has arrested four people, including an HDFC Bank official, under money laundering charges in the suspicious remittance case.

Terming the issue as a case of trade-based money laundering, where accused traders evade Customs duties and taxes to generate slush funds, the agency arrested Kamal Kalra, who works with the foreign exchange division of HDFC bank, Chandan Bhatia, Gurucharan Singh Dhawan and Sanjay Aggarwal after marathon questioning.

All the accused are alleged middlemen for at least 15 fake companies, out of the total 59 that are involved in the crime.