Monday, May 06, 2013


INN News Desk

Cobrapost alleges LIC facilitated money laundering, also alleges nexus between banks and insurance companieS.

Cobrapost has accused 23 private and public financial institutions of aiding money laundering. Life Insurance Corporation, State Bank of India, Bank of Baroda, Punjab National Bank, Canara Bank, Indian Bank, IDBI Bank, Yes Bank, Federal Bank, Reliance Capital, Birla Sunlife are among the few that have been named.
Revealing the nexus between banks and insurance companies, Bahal said, ” If banks don’t have their own insurance companies, they have joint ventures with other private insurers where they invest the money. Yes Bank, for instance, has a tie-up with Bajaj Allianz, which would question an investor only when the investment crosses Rs 1 crore.. and  such investments can be done in cash. Whenever we went about proposing to bankers, public or private, that we wanted to invest our black money in insurance, they immediately called the managers of the their insurance associates to our presence or sought their advice on phone, making it amply clear that banks and insurance companies are hand in glove.”

The gem to fall from grace is the iconic Life Insurance Corporation of India, the largest financial institution in the country,  Bahal explained.

With 30 crore policies under its belt, the insurance giant manages assets worth Rs 1474 lakh crore, about 15 per cent of India’s GDP. LIC underwrites about a-fourth of government bonds and securities.

“It also acts as a bulwark against unprecedented upheavals on Dalal Street, at the behest of the government, so that investors’ confidence in Brand India and in its amazing growth story does not dwindle,” said the Cobrapost release.

“Investigation puts a big question mark on the legitimacy of the business these institutions garner & profits they make,” he added.

According to Firstpost’s editor-in-chief  R Jagannathan, if everyone is guilty, the real question is not about corrupt individuals and institutions alone, but rather a systematic problem.

SBI, Bank of Baroda, Punjab National Bank, Canara Bank, Indian Bank, IDBI, Indian Overseas Bank, Dena Bank Corporation Bank, Allahabad Bank, Orient Bank of Commerce, Central Bank of India.

Private bankers named in the expose: Yes Bank, Dhanlaxmi Bank, Federal Bank, DCB Bank, HDFC Bank, ICICI Bank  Axis Bank .

Insurance companies named in expose: Life Insurance Corporation of India, Reliance Insurance, Birla Sublife, Tata AIG

“Operation Red Spider 2 establishes beyond doubt that money laundering is not confined to private banks, and is not an aberration, as is being made out in certain quarters in the wake of the first expose on March 14 in which HDFC Bank, ICICI Bank and Axis Bank were shown involved in money laundering; it is rather endemic overarching the entire banking system and insurance sector, without exception, however shocking it might be,” the Cobrapost release said.

Aam Aadmi Party’s supremo Arvind Kejriwal  said the expose revealed that the government of India is directly allowing and encouraging money laundering. He also raised doubt whether banks and insurance companies are laundering terror money.

According to the expose, banks provide facilities to customers such as multiple lockers and machines to count money. For money laundering, banks enable creation of forged pan cards and multiple accounts, said Bahal, adding that they advise investors to maintain fictitious accounts for seven years saying that all details  vanish after this period.

Cobrapost has named Andhra politician  Sailijanath Saake in money laundering expose and also alleged that senior bank executives personally go to collect cash to help customers launder black money.

The Cobrapost sting revealed that  laundering transactions were not confined to a few low-level front-office staff members as is being made out in all the bank ‘inquiries’.

“Bank officials holding the ranks of divisional managers, territory manager, assistant general manager and vice presidents say they are all party to such money laundering transaction, said Aniruddha Bahal.

Bank Nifty recovered over 100 points from its intraday low after Cobrapost press conference began this morning.

In its continuing expose on the involvement of leading financial institutions in money laundering, media website Cobrapost on Monday said that 23 major banks and insurance companies were part of the racket. However, immediately after the press conference began, banking stocks recovered from the morning’s losses. The bank Nifty is down just 0.8 percent.

In his second expose on irregularities in the Indian financial system, Aniruddha Bahal today accused 23 public and private financial institutions for facilitating money laundering. Cobrapost has named public banks including State Bank of India, Canara Bank IDBI, Punjab National Bank, Oriental Bank of Commerce and Central Bank.

The Cobrapost investigations were conducted fore more than half a year in many states including Uttar Pradesh, Rajasthan, Delhi, Haryana, Andhra Pradesh & Karnataka

The second round of secret videos have revealed violation of several provisions of the Income Tax Act, FEMA, RBI regulations, KYC norms, the Banking Act, said Bahal in a press conference today. “The revelations amounts to crystal clear offenses under IPC as well as the PMLA (Prevention of Money laundering Act).”

“Money laundering services are being offered openly as a standard product across the board. Even a walk-in customer can avail of such services that help him launder all his unaccounted cash. Money laundering practices are part & parcel of banking & insurance business across the board,” added Bahal.
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