CBI raids HPCL, Dena Bank officials for Rs.65 mn fraud

MUMBAI - The Central Bureau of Investigation (CBI) Thursday raided the offices and residences of several high-ranking officials of a public sector oil major and a nationalized bank in connection with a fraud amounting to nearly Rs.65 million ($1.4 million), an official said.

The raids which continued till late Thursday, were carried out at the offices and residences of two former chief regional managers of Hindustan Petroleum Co. Ltd (HPCL) and a former deputy general manager of the company (both from HPCL’s Byculla office), the branch manager of Dena Bank’s Navi Mumbai (Kalamboli) branch and the owners of Lalit Gas Agency, in Panvel, Raigad.

The official said that the two private gas agency owners, Nihalchand Jain and his son Jinesh Jain had availed excess credit limits from the HPCL with malafide intentions.

They also submitted a fake letter purportedly issued by the Dena Bank claiming that the Kalamboli Branch was converting to core banking and due to software upgradation, there was a connectivity break, leading to non-processing of cheques Dec 24-31, 2008, the official said.

The fake letter was submitted by the Jain duo to HPCL with a request not to deposit their HDFC cheques.

Earlier, former chief regional manager S.N. Pradhan had enhanced the agency’s credit limit to Rs.120 million, much beyond his authority of Rs.2 million during Sep 2006-May 2007 and also failed to take adequate bank guarantees as stipulated by HPCL norms, the official said.

Similarly, in March 2008, another former chief regional manager,

S.P. Donadkar, is also accused of hiking the credit limit to Rs.5.5 million for a company named Enkei Castolloy, beyond his authority of Rs.2 million and bypassing HPCL’s norms.

Since Enkei Castolloy was making payments to HPCL through Lalit Gas Agency, Donadkar’s actions resulted in huge losses to the oil major, the official said.

In this conspiracy, Lalit Gas Agency issued various cheques to HPCL which were dishonoured on grounds that it had requested Dena Bank to stop payment.

Playing his part in the fraud, the Dena Bank branch manager, S.K. Ashwini, despite knowing that the cheques were dishonoured, did not inform the HDFC Bank of the developments on the same day, the official said.

Instead, Ashwini chose to send the dishonoured cheques in 14 lots amounting to Rs.80 million between Dec 2008 and Jan 2009.

In the meantime, the HPCL’s former DGM (Finance) C.I. Chunkare continued to extend credit to Lalit Gas Agency, violating credit policy norms and the company suffered losses, the CBI official said.

On Thursday, CBI raided the offices and residences of Pradhan, Donadkar, Chunkare, Ashwini and the Jains, and also seized incriminating documents from their premises.