Is Arundhati Bhattacharya protecting Coal importers who indulged in over-invoicing?

Is the DRI being stalled by SBI on the over-invoicing of Coal imports?

Is the DRI being stalled by SBI on the over-invoicing of Coal imports?
Is the DRI being stalled by SBI on the over-invoicing of Coal imports?
While throwing her hat into the race for the next Reserve Bank of India (RBI) Governor post, State Bank of India (SBI) Chairman Arundhati Bhattacharya is in the spotlight for her reluctance to share the money laundering information by the coal importing corporate houses through SBI’s Singapore, Hong Kong and Dubai branches.  Under Prime Minister’s Office’s stern direction, the Directorate of Revenue Intelligence (DRI) was asked to probe into the Coal Importing Scam from Indonesia ranging over ₹30,000 crores ($4.47 billion) by some importers who allegedly may have inflated coal prices and siphoned off profits.

The DRI sensed a huge scam in coal imports from Indonesia. In a nutshell, it is an instance of the over-invoicing of coal. Even though the ships directly land in India from Indonesia, the bills were routed through fictitious and benami firms in Singapore, Hong Kong and Dubai before landing in India. Using the benami shell companies, mostly owned by the importing Indian Corporates, a killing was made by selling coal at inflated prices, which ultimately ends up with common man by paying extra cost to the electricity consumed.

This over-invoicing in coal import scam started from 2008 onwards. In India 90% of the coal is imported from Indonesia with about 5% from Australia. Among the coal imports from Indonesia, 70% is executed by Adani Group of companies and second biggest importer is Anil Ambani’s Reliance Group companies, which ranges around 5%. The other significant importers are Essar Group, JSW Steels and private operators for state governments and PSUs engaged in power production.

The major banks involved in the money transfer and over-invoicing are State Bank of India, Bank of Baroda(BOB) and ICICI Banks’ branches in Singapore, Hong Kong and Dubai. Scams in India seldom happen without the help of bankers. 85% of the fraudulent over-invoicing happened through SBI’s foreign branches. Bank of Baroda’s foreign branches handled around 10% and ICICI Bank handled around 5%. The sum total of these sham transactions is worth a staggering ₹30,000 crores ($4.47 billion).

The DRI found that by these over-invoicing methods, the value of coal was inflated to more than 250% by these corporate houses. After getting the nod from the Prime Minister’s Office (PMO), DRI sent notices to SBI, Bank of Baroda and ICICI Bank. Only ICICI Bank cooperated with DRI and submitted all the details of over-invoicing, which exposed the 250% over-billing, which directly affects the price of electricity.

Both the Public Sector Banks SBI and Bank of Baroda(BOB) chose to keep a stony silence. Revenue Secretary Hasmukh Adhia on May 20, wrote to the SBI Chairman Arundhati Bhattacharya that they must share the details sought by the DRI. But she rejected Revenue Secretary’s direction claiming some laws of Singapore and other foreign countries on “secrecy”. DRI has knocked on the doors of Revenue Secretary after the public sector banks denied information.

The communication between Revenue Secretary Hasmukh Adhia and SBI Chairman Arundhati Bhattacharya is published below. PGurus well-wishers in the banking sector told us that RBI Governor Reghuram Rajan also did not co-operate with DRI officers who sought his help in tracking the over invoicing in Coal Import Scam.

If ICICI Bank can give details of the their branches in the same foreign countries, why can’t SBI and BOB? Is Arundhati Bhattacharya protecting some corporate houses and stalling the Revenue Secretary? How this affects her chances of becoming the RBI Governor is a million dollar question as this is a probe ordered by Prime Minister Narendra Modi’s office.
DRI-SBI correspondence Page 1
DRI-SBI correspondence Page 2
DRI-SBI correspondence Page 3

Question for Ms. Bhattacharya:
We have carefully read the Rule S47 of the Banking Secrecy Act of Singapore. Your letter is quoting Item 1 of the act in Page 2. We think that when the request is coming from a government, the interpretation should be done according to Item 5 of the act in Page 3.
The entire Rule 47 of the Banking Act of Singapore is reproduced below:

Singapore Mas Rules 47



Note:
1. The conversion rate used in this article is 1 USD = 67.15 Rupees.
2. Text in Blue points to additional data on the topic.

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10 COMMENTS

  1. SBI, or any bank for that matter, operates as individual entities in different countries. The banking laws in Singapore are very strict and even a court in Singapore cannot order to revel information of any account, unless it is linked to terrorism or another such serious crime.

    SBI cannot circumvent these laws. The same issue is also faced by ICICI.

    DRI/ED will have to find another way of getting to these guys. Probably by reaching out to Singapore or Indonesia directly.

  2. चीन में बिजली की दर एक रुपये प्रति यूनिट है. चीन बहुत पहले ही समझ गया था कि आर्थिक विकास की पहली सीढ़ी ठीक दर पर बिजली है. सारी दुनिया में केवल चीन में बिजली पूर्ण रूप से भ्रष्टाचार से मुक्त है. चीन के एक रुपये प्रति दर पर बने माल के आगे भारत के उद्योग कहीं टिक ही नहीं सकते हैं। प्रत्येक क्षेत्र में एक एक करके चीनी माल आता जा रहा है और भारतीय उद्योग धीरे धीरे बंद हो रहें हैं । भारत में मंदी का 70% कारण यह भ्रष्टाचार से महँगी बिजली है। उद्योगों के बाद अब व्यापार भी इतनी महँगी बिजली का भार वहन ना कर पाने के कारण बंद हो रहें हैं। उद्योग, व्यापार और एक मज़दूर जिसका बिजली का बिल प्रति माह 500 रुपये है कोई भी इतनी महँगी बिजली से लंबे समय नहीं चल सकता है। pgurus से अनुरोध है कि इस भ्रष्टाचार की महँगी बिजली की पूरी श्रृंखला में आयातित कोयले के अलावा, भारतीय कोयले, बिजली की वितरण कंपनियों के भ्रष्टाचारों को भी सामने लाया जाये। इस देश के भ्रष्ट और महामूर्ख नीति नियंताओं को ठीक दर पर बिजली का महत्व pgurus जैसे लोग ही समझा सकतें हैं।

  3. In China, the price of electricity is Rs. one per unit because China understood long before everyone else that the first step in economic development is to provide electricity at right price. Moreover China is the only country in the world where Power Sector is totally free of corruption. Indian goods can never compete with Chinese goods produced with electricity costing merely Rs. 1 per unit. As a result, Chinese goods are slowly and steadily invading every sector in India causing closure of numerous industrial units one by one. Expensive electricity because of totally corrupt power sector is the biggest factor for recession in India. Not only industrial units but the trade too has been severely hit due to inability to afford such high rates of electricity. Be it industry, trade or a laborer, whose monthly electricity bill comes to about Rs 500/-, no one can afford such highly expensive electricity for long. We earnestly request pgurus that in this long chain of totally corrupt power sector and resultant highly expensive electricity, to please bring into the open, apart from imported coal, other major actors/factors like indian coal and most importantly corruption which has completely infested the power distribution companies. Only entities like pgurus can drill the significance of right pricing of electricity into the utterly corrupt and totally imbecile heads of policy makers of our country.

  4. PM Modi must be ruthless when it comes to eradicating corruption, purging the well oiled corrupt system should not be delayed. I don’t think its possible to hold this information without the blessing of some one at the top. PM Modi must find who this person is.
    Also if the government drags its feet to act against the corrupt then talk about economic reforms is a sham.

  5. नरेंद्र मोदी द्वारा भारत के सबसे भ्रष्ट उद्योगपति को भ्रष्टाचारोपरान्त पदम् विभूषण देने और ओबामा और पुतिन के पास इन भ्रष्ट उद्योगपतियों को ले जाने से इनके हौसले सौंवे आसमान पर हैं।

  6. If the real muck comes out … the entire psu banking sector will collapse.Huge sums have been siphoned off by corrupt corporates via dubious loans just like Mallya.Apparently the bad loans total up to 10 lakh crores !!
    Who owns ICICI and HDFC bank ?? Both are foreign banks.One is said to be owned by Ambani.WHo owns HDFC ?? Just saying that sovereign fund xyz owns it is bunkum.Who are the end beneficiaries ??

  7. And this lady wanted to become RBI Governor! Arundhati Bhattacharya is part and parcel of corrupt banking system which toes to the lines of murky corporates and politicians.

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