Hero Group: Exposure in Citibank scam Rs.28.75 crore

GURGAON/NEW DELHI - The Hero Group, which was allegedly duped in the Rs.300 crore Citibank fraud, Friday said that its exposure to the scam was just Rs.28.75 crore and that investments were made by its entities.

This is in sharp variance to claims by police, which said the group’s alleged exposure to the scam was Rs.200 crore as claimed by the police.

“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,” the company said in a statement.

According to the statement, the investments were made as part of routine treasury operation in what the company described as a “perfectly legal investment option”. It also said the group was in discussion with the bank for recovery of its investment.

“The group is taking appropriate action and has also initiated dialogue with relevant authorities and Citibank to recover its dues,” statement said.

Citibank’s relationship manager Shivraj Puri — the alleged mastermind behind the scam — had surrendered Thursday and was sent to seven-day police remand by a special court in Gurgaon.

Duty Magistrate Raj Kumar Yadav directed the police to produce him again Jan 6.

Gurgaon Police Commissioner S.S. Deswal had Thursday said that more arrests may be made after Puri’s interrogation in what is being called India’s biggest banking fraud.

According to police, firms belonging to the the Hero group had invested Rs.200 crore in Puri’s account and Rs.100 crore were invested by individuals. Puri, in turn, invested the money in five major brokerages, including Religare, Okaya and Bonanza.

He reportedly managed to con high net worth investors after forging documents, which he said was from the watchdog Securities and Exchange Board of India (SEBI), to offer some lucrative returns and he claimed it had Citibank’s backing, the police said.

The watchdog denied the existence of schemes made popular by Puri, who claimed Thursday he had done no wrong.