Hero loses Rs 28 cr in fraud

The Hero Group, led by Brijmohan Lal Munjal, admitted that its exposure to the fraud is Rs 28.75  crore and was done through its entities.

“These investments were made as part of routine treasury operation in what seemed like perfectly legal investment options. The Hero Group is disappointed to learn that it has become a victim of the fraud under question. The group is taking appropriate action and has also initiated dialogue with relevant authorities and Citibank to recover its dues,” a statement from the group said.

In another statement, the group said neither its flagship firm Hero Honda nor its managing director Pawan Munjal had any involvement in the case. Reserve Bank of India (RBI) on Friday said it has initiated a probe into the Rs 300-crore fraud at Citibank’s Gurgaon branch and will soon issue a statement.

“Any bank where fraud (has taken place), we cannot (ignore)...and from banking side we have to do our own job..how it (Citibank fraud) has happened and what are the implications,” RBI Executive Director G Gopalakrishna told reporters.

Meanwhile, Gupta was called for questioning as part of the investigations, as a major chunk of the money has gone into brokerage firms—Religare and Bonanza, Gurgaon Police Commissioner S S Deswal said.

A probe was on to know whether the cash was still available or whether it was invested in financial instruments. Senior officials of the brokerage firms were also called by the police to ascertain the money trail. The other suspects— Premnath (92) and Shiela Premnath (86), Puri’s grandparents and Dhiksha Puri (60), his mother—were not arrested because their involvement appeared to be negligible. They were, however, questioned.

Deswal said a majority of the funds invested by Puri of High Networth Individuals (HNIs) and corporate entities were safe, as they were invested as financial instruments. He also said Securities Exchange Board of India (SEBI) had confirmed that the letter, used to allure customers, was forged.

All the agencies involved, including regulators the SEBI and Reserve Bank, Citibank and the police, were acting in coordination for the probe, he said. Citibank came to know about the fraud roughly a month ago and started its internal investigation.