TN: CBI reveals Rs 18 crore gold scam in MMTC
By C Shivakumar | ENS - CHENNAI
24th July 2012 08:14 AM
A probe by the Central Bureau of Investigation (CBI) has unearthed irregularities in the Union government-run premier foreign trade behemoth, the Minerals and Metals Trading Corporation of India (MMTC), to the tune of Rs 18 crore. During the course of the probe, the investigating agency also seized 400 kg of gold from the premises of a private company alleged to have been favoured by MMTC officials.
According to documents available with Express, the FIR alleged that during the period 2007-09, at Chennai and other places, S Gurusamy, former chief general manager of south zone, MMTC Limited, Chennai Regional Office, V Gurumurthy, former general manager (Finance and Accounts), MMTC Ltd, and some unknown officials entered into a criminal conspiracy with Chennai-based Surana Corporation Limited (SCL) to cheat MMTC in bullion (gold and silver) trading.
“The officials abused their official position by extending undue favours to Surana Corporation Limited by intentionally omitting to debit and recover the difference in exchange rate from the firm thereby causing a loss to the tune of `18 crore,” the FIR says. During that period, SCL used to import gold and silver under the Stand-by Letter of Credit (SLBC) scheme. It used to deposit the cost of bullion arrived on the basis of a “notional price and notional exchange rate” prevailing on the date of delivery of consignments.
As per the system and procedure, SLBC transactions are routed through the online Bullion Trading System (BTS). However, the two officials along with others dispensed with the all-important BTS mode and made all transactions manually to allegedly favour the SCL.
“The officials deliberately treated the provisional invoice as final. They showed the difference in cost [difference between the provisional and the final invoice] as a variation in the purchase rate.” The officials manipulated the system and intentionally failed to reconcile the difference in exchange rate and to recover the premium and other accompanying costs, the FIR added.
Interestingly, the officials also “covered up” the wrongful loss to MMTC by allegedly showing a debit balance of `18 crore in favour of Foreign Vendors Account in their book of accounts.
Sources revealed that following the registration of cases against the officials for criminal conspiracy, cheating and for various offences under the Prevention of Corruption Act, CBI sleuths conducted raids in various places on June 20, 2012, including the residences of the officials, godowns and corporate offices of SCL. During the raid, CBI found 400 kg of gold kept in the premises of SCL. Besides this, the officials also seized cash.
The gold seized from SCL included gold bars, gold coins, chains, rings and bangles, brought into India without any valid documents, it is alleged. Interestingly, Gurusamy after his retirement from MMTC on June 2008 joined SCL as director while Gurumurthy, who retired on November 30, 2011, joined a leading jewellery firm in Chennai that bought gold from Surana.
MMTC is India’s largest foreign trade enterprise.
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Comments(4)
In Gold Imports Nominated Agencies like MMTC are not financially involved directly and only do the paper work and in their name. The international bullion supplier sends metal based on LC opened with the Fixed Deposit given by the Gold Trader along with additional margin for any price fluctuation in gold as well as INR. Within the SBLC period( NOT SLBC) the gold trader can fix the price. If adverse, additional cash margins will be provided by the gold trader and if not the prices are fixed to the value of FD. Hence there is no cash involvement in this operation.If additional margins have not been collected then how the final payment was made if in excess- did MMTC fund it and if so from where did they get funds. The exact nature or debits will reveal the transaction without amibiguity as there has been cash outflow. Further if one of the official have joined Surana Corporation- strange as no one who has favoured a client will openly join in a responsible post.The news appears biased
Posted by Anand R at 07/24/2012 13:31 Reply to this Report abuse
In Gold imports nominated agency like MMTC are only channels of imports. The Bankers to LC have to honour it and will be monitoring the adversities marking to market. If adverse and additonal margins is not placed- then both the gold price and rupee will be fixed. In this news has MMTC official taken the risk at the time of fluctuation without collecting it from Gold Trader and how did the banker kept the LC open w.r.t rupee end. Further if it is a risk absorption by MMTC even unwittingly ( which is a remote chance), would it not have got noted within the end of the financial year as there has been cash outflow. Last but not the least if it is a risk managment lapse on the part of MMTC and have allowed the bank to debit their account for the final payment- why did it not take action then. If the official have colluded and debited foreign vendors account instead of surana corporation- why did the debts remain for this long. What did the next man after Mr.Guruswamy do post june 2008.
Posted by Anand R at 07/24/2012 14:10 Reply to this Report abuse
First Para and the Last Two Paragraphs speaks about seizure of 400 kg of Gold. It is given to understood that Surana Corporation is one of the large bullion importer and star exporter , manufacturer of gold jewellery and wholesaler. Linking the inventory which values more than 100 crore of a rated and listed public company to MMTC lapse appears to be the making of the news reporter. A company from the published results having a turnover of more than 8000 crores - holding an inventory is part of business. Even a large retailer will hold this . Criminal conspiracy needs to be proved and raiding the premise of the clients of MMTC without proper records appears to be unsubstantiated and abuse of power. Paragraph 2 to 6 commenting on nexus between MMTC officials and Surana Corporation is more of a verbal abuse without clearly mentioning . The amount involved deserves more study then just making headlines. The news needs to be substantiated how the transactions has been conducted
Posted by Anand R at 07/24/2012 14:42 Reply to this Report abuse
In Gold imports it is obvious that international bullion supplier - the foreign vendor supplies metal and takes payment for it on the value fixed by the Gold Trader. Hence any debit in Foreign Vendor Account as mentioned in the news is like a suspense account which calls for immediate study. As the debits are there for more than five years- what have been the successive auditors doing without asking for details. Now as outlined earlier in the comments- has MMTC failed to collect the margins on any adverse movement and on account of which the bankers debited the MMTC account when the final payment for the LC was made, In that case the exact details can be placed and if it is operational inefficiency then it is not criminal conspiracy. The time lapse- no sane official will remain static with the huge debit in suspense( foreign vendors account) without collecting it for such a long time from a going concern of standing. How many imports did MMTC do after this debit and why no action ??
Posted by Anand R at 07/24/2012 15:11 Reply to this Report abuse