The Central Bureau of Investigation (CBI) has filed a preliminary enquiry (PE) against an ex-banker of UCO Bank, unknown officials of RBI and eight traders in the $3.2 billion Indo-Iran UCO Bank scam.

Indiatoday.in was the first to expose the $3.2 billion (Rs 20,000 cr) Indo-Iran trade scam, perhaps, one of the biggest hawala scam, against dozens of exporters that deals with Central Asian nations, specifically Iran and Azerbaijan.

In its initial investigation, the enforcement directorate (ED), Mumbai had found that nine foreign nationals, mostly from Iran and Azerbaijan entered the country on student visas and set up multiple shell companies to gain access to funds held by Iran's UCO Bank account.

These foreign nationals offered attractive business proposals to UCO Bank with an assurance that they would maintain substantial deposits with branches once funds from Iran are credited in their accounts. Knowing that the proposal was against various provisions of forex laws and know your customer (KYC) guidelines, one of the bankers offered additional interest rates for the deposits made out of Iranian fund that came as advance remittance for exports.

Later, the information said that the advance inward remittances were credited to the accounts of said foreign nationals by producing receipts of fake remittances. Also, several consolidated statements submitted by the branches of the bank about irregularities in export remittances were neither taken seriously nor reported to any external agencies as mandated by the RBI.

Seeing the gravity of the case with its international ramifications, on the request of Ministry of Finance and under the supervision of Central Vigilance Commission (CVC), the CBI took over this case from the ED and had begun its preliminary enquiry (PE).



In April 2016, the Anti Corruption Bureau (ACB) of CBI, Mumbai filed a PE against:

Arun Gupta, former AGM, UCO Bank, Mumbai

Unknown officials of RBI, Mumbai

True Export Services Pvt Ltd

A&H General Exports Trades

Star Elite Export Trading Pvt Ltd

New Age Export Services Pvt Ltd

Connect Traders Pvt Ltd

Elite World General Trading Pvt Ltd

Genius Exports Pvt Ltd

Centroid Exporters Pvt Ltd

Indiatoday.in has accessed the PE copy, which said, "Considering the huge remittance to the tune of Rs 902 crore received by the eight companies, money laundering by private pesons in connivance with the bank officials is also suspected in this case."

The PE points out that although no financial loss is caused to UCO Bank, Mumbai, the UCO Bank officials had abused their official position and committed gross irregularities in opening the said accounts and not verifying the export of goods against which advance payment was received from foreign buyers, thereby facilitating the alleged money-laundering by private parties.

RBI officials in scam

The shocking element is the involvement of RBI official/s in the scam. The PE points out, "The matters has to be reported to RBI for necessary action and in the said matter it is alleged that UCO bank has not followed up the same as per FEMA provisions. The concerned officials of RBI who undertake monitoring of foreign exchange transactions of public sector banks have failed to detect the above said transactions."

It is therefore essential to enquire into the genuineness of exports done, if any, along with the money trail of huge funds received into the eight current accounts for exports and its utilisation by the private companies/firms whose credentials also need to be probed into. "The above mentioned information reveals the commission of gross misconduct on the part of Arun Gupta, unknown officials of RBI and the eight account holders," the PE concludes.

Source from CBI told Indiatoday.in, "CBI, ACB, Mumbai had received a credible information to the effect that during the period July 2013 to December 2013, Arun Gupta - the then AGM, UCO Bank, Fort Branch, Mumbai had in abuse of his official position allowed the opening of as many as eight current accounts in his branch in favour of companies/firms - ostensibly to receive huge amounts to the tune of Rs 902 crore as advance payments for future exports and allowed siphoning off such payments by the said private parties in violation of RBI guidelines."

It is also alleged that during the above said period, Arun Gupta, AGM had allowed opening of eight current account favouring the following eight companies / firms without following any of the KYC norms.

Total transactions under probe

The said accounts had initially received huge amounts as advance payments from foreign buyers for future exports and later the payments credited into such accounts were allowed to be transferred to other entities as shown below:

Name of the trader Credited Amount Debited Amount Date

True Export Rs 494 cr Rs 494 cr 26/9/13

A & H General Export Rs 396 cr Rs 396 cr 25/9/2013

Star Elite Export Rs 205 cr Rs 204 cr 5/12/13

New Age Export Rs 26 cr Rs 26 cr 5/12/13

Connect Traders Rs 28 cr Rs 28 cr 4/12/13

Elite World General Rs 1.3 cr Rs 1.3 cr 2/7/13

Genius Exports Rs 8.1 cr Rs 7.5 cr 4/12/13

Centroid Exporters Rs 33 cr Rs 33 cr 4/12/13

(Total amount transacted on the single day by these companies)

These companies were formed at Chandigarh by Indian nationals and subsequently transferred to foreign nationals without following the due process of transfer of companies as laid down under the companies act.

It is also alleged that the private companies mentioned in the above said accounts have committed gross financial irregularities in connivance with the bank officials while transferring funds using such accounts. "They have not exported any goods against which advance payments were received from the foreign buyers," the CBI source said.

As per the provisions of FEMA, 1999, whenever advance remittances are received for further exports, the concerned bank/branch has to ensure that the relative export of goods takes place within 12 months of receipt of such advance remittances by following up with the concerned beneficiaries. For that collecting the proof of exports such as; invoices, shipping bills, GR forms duly attested by custom authorities along with other relevant documents are essential.

The CBI found that no genuine export has taken place against the advance payment received and the concerned parties would have siphoned off the funds illegally and the ultimate object of opening of such accounts has been to park the money in the accounts of suitcase companies and conveniently siphon off the funds illegally.

RBI blamed UCO Bank

On the issue of RBI officials involvement, RBI has cornered itself putting entire blame on UCO Bank. "The entire process of remittances including pre-remittance due diligence and post-remittance followup is the responsibility of the authorised dealer bank and RBI is not involved in such operational matters", RBI spokesperson said in an official statement to Indiatoday.in

RBI continued saying, "The issue apparently relates to alleged remittances to Iran in violation of the sanctions prevailing at that time and the involvement of the banking system in India. DoE has been investigating into any possible irregularity or contravention in the said remittances. RBI has rendered assistance to the DoE in their investigation by providing the information available with it. The outcome of investigation by DoE is awaited."



Role of Hawala dealer Afroz Fatta

Whereas, the CBI has begun its further investigation, the ED is likely to convert this forex violation (FEMA) case into a prevention of money laundering act (PMLA) case, and the investigation, for the time being till the new joint director (JD) arrives in Ahmedabad zonal region, the case would get probed by the Mumbai team.

The major reason behind to investigate Indo-Iran scam case under PMLA is due to its hawala link. In its initial probe, the ED officials had found that "one of the companies involved in layering of transaction is a company involved in Afroz Fatta case."

Unless the CBI registers a FIR in this case further, it would be quite difficult for the ED to convert this FEMA case into PMLA and catch those Iranian scamsters, source from ED said.

Indiatoday.in has an exclusive investigation report that reveals the prominent role played by hawala dealer Afroz Fatta and his layer of companies in UCO Bank scam. Indiatoday.in has in hand the copies of two bank statements of two shell companies GT Traders and Aarzoo Enterprises (named in Ahmedabad based hawala scam) - receiving money in crores from two suspected shell companies of UCO Bank scam i.e. True Exports and Star Elite Trading Pvt Ltd (among CBI's 10 names).

The Statement of GT Traders ( Account Number - 913020027983590) between June 14, 2013 to August 26, 2014 indicates - Rs 15 crore and Rs 10 crore were been credited by True Exports and Star Elite Trading, respectively. The second bank statement of Aarzoo Enterprises (Account Number -913020028929700) between June 20, 2013 to May 27, 2014, total 14 transactions were made by True Exports and Rs 62.2 crore were credited in the account.

According to ED sources, UCO Bank's money was flowing out of GT Traders and Aarzoo Enterprises into Afroz Fatta's companies based in Dubai and HongKong.

So far, ED has found that the shell companies took advance payments of at least Rs 946 crore from UCO Bank against future exports to Iran and then diverted it to certain entities in Dubai and Iran. Some of these advances were taken to purchase diamonds for re-export to Iran.



Whistleblower blames three senior officials

Sources say, the CBI has filed a FIR only against one former official of UCO Bank, which is surprising. "The scam of this size is not possible without the involvement of few senior higher-ups," the source said.

Few months back, blowing the lids of UCO Bank, an anonymous whistleblower has written an open letter to the ED, Mumbai allegedly exposing how the senior most officials of UCO Bank not only masterminded the alleged misuse of Rs 20,000 crore (and much more) in export advances paid out against bogus exports to Iran, but also how these officials helped "anti national element and terror outfit members" to open bank accounts and reaped the profits.

Indiatoday.in has accessed the copy of that confidential letter written by the whistleblower to the ED, which makes direct allegations on three senior officials of UCO Bank. One is the former CMD and remaining two are senior executives handling Treasury Branch of UCO Bank in Mumbai.

The anonymous letter makes three crucial allegations:

Three officials are direct responsible for Indo-Iran trade scam

This scam could be around Rs 35,000 crore and not Rs 20,000 crore, as it looks like

These officials helped anti national elements and terror outfit members to open the bank accounts in the UCO Bank with substantial deposits, compromised national security and international relationships.

The ED was waiting for CBI's action since long, so that it could probe Indo-Iran UCO bank scam under PMLA act. And now when the PE has been registered done, the ED officials would try to expand its probe and "would try to catch the bigger fishes hiding deep inside the water."