Gurgaon:
The Hero Group today acknowledged that it invested close to 29 crores in schemes suggested by Shivraj Puri, the Citibank executive who is believed to have pulled off a 300-core scam at the Gurgaon branch of the bank. However, the group clarified that its flagship company, Hero Honda Motors, had not been impacted by the scam.
Puri was arrested yesterday. He was the Relationship Manager at Citibank in Gurgaon.
Three people were questioned by the Gurgaon police today - Sanjay Gupta, the Chief Financial Officer of the Hero Group, as well as one executive each from broking firms Religare and Bonanza - firms which Puri had used to invest the money, clients had given him.
The Hero group issued this statement today: "The exposure of the B.M.L Munjal controlled Hero Group in this case is only via its entities, and is Rs. 28.75 crore. These investments were made as part of routine treasury operation in what seemed like perfectly legal investment options. Hero Group is disappointed to learn that it has become a victim of the fraud under question. The Group is taking appropriate action and has also initiated dialogue with relevant authorities and Citibank to recover its dues. This is to further clarify that Hero Honda Motors Ltd, a part of the Group, has no involvement in any of these investments."
Puri allegedly pitched high-return schemes to high net worth individuals who had Citibank accounts. He then diverted the money into accounts in the names of his family members, and siphoned the money into the stock market. Police sources say the Hero group was among nearly 20 corporate firms who bought into Puri's schemes. Gurgaon Police Commissioner S S Deswal has said that Puri's Rs. 300 crore swindle was based on Rs. 200 crore collected from corporates and another Rs. 100 crore collected from individuals.
"The destination of the money is into these two broking firms. The money is from private, unlisted companies which had invested the money. If any leads come wherein we feel that other agencies need to investigate, then we will include them," said SS Deswal, Commissioner of Police, Gurgaon.
The police say that 18-20 companies and close to 30 individuals had invested money with Puri over the past 14 months. Puri had initially even returned some of the money with a 20 percent rate of return in just a couple of months to win their trust, and often customers would then put in bigger amounts.
According to sources, no investment was below 15 lakh and typical investments were more than five crores each.
The matter had come to light when one customer cross checked with Citibank about the scheme that Puri was offering. Citibank has now launched its own probe into the scam and to improve safeguards.
Meanwhile, the Reserve Bank of India (RBI) today said it has initiated a probe into the fraud at Citibank's Gurgaon branch and would soon issue a statement in this regard.
"Any bank where fraud (has taken place), we cannot (ignore)...and from banking side we have to do our own job...how it (Citibank fraud) has happened and what are the implications," RBI, Executive Director, G Gopalakrishna told reporters.
(Read: RBI starts inquiry in Citibank fraud)