Date:04/01/2005 URL: http://www.thehindubusinessline.com/2005/01/04/stories/2005010402810100.htm

Back OBC files complaints against 5 GTB borrowers — Due diligence shows `serious financial improprieties'

Our Bureau

New Delhi , Jan. 3

ORIENTAL Bank of Commerce has filed criminal complaints with the Central Bureau of Investigation against five borrowal accounts of the erstwhile Global Trust Bank for having caused "wrongful loss" to the bank.

Global Trust Bank (GTB) was merged with Oriental Bank of Commerce (OBC) in 2004.

Complaints have been filed against Unitel Software Ltd, Mr Ashok Advani of Business India publications, Petro Energy Products Co Ltd, Shonk Technologies International Ltd and Pearl Distillers Ltd.

A Finance Ministry statement on the complaints filed by OBC said that some other cases were being examined and further complaints would be lodged with the CBI in due course.

OBC's move comes days after the Finance Minister, Mr P. Chidambaram, assured Parliament during the recently-concluded winter session that criminal cases would be filed in matters relating to GTB shortly.

Stating that "serious financial improprieties" were revealed in the five accounts during the post-merger due-diligence conducted by OBC, the Finance Ministry said "high degree of imprudence in exercise of sanctioning powers have been observed where the bank (GTB) appears to have abetted certain group of borrowers to siphon off funds through banking channel."

The Finance Ministry release, however, did not mention the names of the GTB officials who have allegedly colluded to cause loss to the bank.

CBI sources confirmed to Business Line that cases have been registered in two of the five complaints received - against Unitel Software and Mr Ashok Advani.

"We are conducting the process of verification in the remaining cases," an official spokesperson of the CBI said.

Efforts to reach OBC officials during the day, however, proved futile.

OBC's investigations have revealed that GTB had taken high credit exposures in certain accounts, exceeding exposure norms prescribed by RBI.

"The conduct of most of these accounts reveal that deliberate attempts have been made to camouflage the position of NPAs by making fresh sanctions in sister/allied concerns including some front companies," the release said.

It said the allegation against Unitel Software was that it had caused wrongful loss to the tune of Rs 6.76 crore to GTB, while the charge against Mr Ashok Advani and unnamed officials of the bank is that of cheating the bank to the tune of Rs 15 crore by obtaining credit facilities on the basis of misrepresentation.

It is alleged that Business India had falsely mentioned that it was a new account for GTB in the process note while the fact was that the company was banking with GTB since 1994.

Petro Energy Products is alleged to have cheated the bank to the tune of Rs 78.41 crore at Bandra, Mumbai Branch, and Rs 23.15 crore at the Chennai Branch, whereas Shonk Technologies is charged to have caused a wrongful loss of Rs 38.49 crore on the basis of misrepresentations and for diversion of funds for purposes other than for which the loan was sanctioned.

A loss of Rs 10.28 crore has been allegedly caused by Pearl Distilleries Ltdwrongfully.