News HDFC BANK, CASE 3: K. GERARD, BRANCH MANAGER; M. KUMAR, FINANCIAL CONSULTANT, HDFC BANK, VENKATESWARAN K, TERRITORY MANAGER, HDFC STANDARD LIFE INSURANCE, CHENNAI

HDFC BANK, CASE 3: K. GERARD, BRANCH MANAGER; M. KUMAR, FINANCIAL CONSULTANT, HDFC BANK, VENKATESWARAN K, TERRITORY MANAGER, HDFC STANDARD LIFE INSURANCE, CHENNAI

“Cash we do not collect it as such actually. But in other banks mein we deposit cash and take DDs also.” – Gerard Posing as a real estate businessman, the Cobrapost journalist visited this branch of HDFC Bank in Mylapore, Chennai. His stated purpose: A certain politician wants to invest black money. Would the bank help?


By Cobrapost.com - July 26, 2011


“Cash we do not collect it as such actually. But in other banks mein we deposit cash and take DDs also.” – Gerard
Posing as a real estate businessman, the Cobrapost journalist visited this branch of HDFC Bank in Mylapore, Chennai. His stated purpose: A certain politician wants to invest black money. Would the bank help?
Here the reporter first met M. Kumar, who works as a financial consultant with the bank. Kumar began by suggesting plans including HDFC Super Premium, but then, to win over the confidence of this prospective client, he invited Branch Manager K. Gerard to join in. A politician wants to invest big money, reiterates the journalist, in the name of his wife and in the name of the man representing him. The name of the politician should remain secret.
Gerard comes straight to the point: “Investment kaise karoge aap? Cash mein karoge? Uske liye ek naya guideline aaya tha zara main poochh leta hun (How will you invest. Will you invest in cash? A new guideline has come for that. Let me ask about it).” After talking to his senior on the phone, Gerard turned to the journalist: “Unhone ek accha idea dia Sir, unhone bol raha tha ki agar maan lijiye … see other banks mein jo hota hai DD lena (He has given me a good idea Sir. He was telling me, suppose … see you have to get DD from some other banks). DD you can take it. Cash we do not collect it as such actually. But in other banks mein we deposit cash and take DDs also.” What Gerard said was that although it was not possible to accept cash, they could get help from some other banks for making DDs against the cash. This way, the investment of black money could be facilitated.
Wouldn’t the investment come to the notice of the Income Tax Department if he submits documents including his PAN card number? Gerard reassures him: “PAN humko nahin chahiye hoga. Humare form yahan pe jo process karte hain, wahan par chahiye hoga. Hum yahan se Income Tax ko nahin bhejte. Aapke wahan par jis jis ke naam se daal sakte hain probably aap shift kar ke naam daal sakte hain. Maan lijiye aap ke naam par ek ho jayega, aap ke brother ke naam pe ek ho jayega, madam ke naam pe. Aise main bol raha hun (I don’t need PAN. Actually, the officials who process the form will require it. We don’t send it to the Income Tax Department. You can invest in the names of the people you want. Probably you can shift [sic] the names. Suppose, one is done in your name, one is done in your brother’s name and another in madam’s [your wife’s] name. I am telling you this way). Sir I would suggest you start off with Rs. 20 lakh.”

By suggesting a ‘shift’ of names, Gerard means that the client should invest in the names of different people. This becomes clearer when the journalist asks him if he could pay the premium in cash the next year: “Cash humko isi tarah karna parega jaise humne abhi pay kiya hai. Normal process hota toh main cheque le leta. Abhi humara idea kya hai (We will have to go about the cash the way we have already discussed. Had it been a normal process, I would have accepted cheque. What my idea is) take in a multiple people’s name with DD from nationalized bank jahan wo aapse koi details nahin poochhte.” In other words, converting cash into DDs from a nationalized bank is possible without anybody asking any questions.

But then the responsibility of procuring DD for him would rest with Gerard. The client will arrange only the cash. Gerard says: “Thik Hai (All right).”

The journalist tells Gerard that the cash was lying at home and had to be disposed of the same day. Sensing the urgency, Gerard replies: “Aisa hai kya Sir? Mujhe nahin pata tha ki itni jaldi hai (Is that so Sir? I didn’t know you are in such a hurry).”

Gerard picks up the phone to apprise his senior of the situation and seeks his advice on how he should help the politician invest his black money at short notice. In no way should the politician’s name come to light. The person on the other side, Gerard says, is a very senior official of the bank and is eager to meet the ‘politician’s representative’ that very day in the same branch. The senior official would personally deal with the case and there is nothing to worry about. Gerard himself reassures the journalist: “Humari taraf se hum kuchh nahin poochenge (On our part, we are not going to ask you anything).”

The senior official Gerard has spoken to on the phone is none other than Venkateswaran K, Territory Manager of HDFC Standard Life Insurance. Venkateswaran, popularly known as ‘Venkat’ and considered a ‘Superboss’, heads no less than 53 branches in Chennai. The Cobrapost journalist meets Venkat at the appointed time.

The ‘Superboss’ turns out to be very investor-friendly but strikes a note of caution: “See we cannot take more than 15 lakh per name inclusive [of] all schemes. It should not cross 15 lakhs per individual because past 20 lakh every year I am supposed to report to IRDA that these are the customers. So, today it’s 20. Tomorrow it can come down to 17–18. I will stick to 15. I will never cross 15. In fact, if you can close it at 10 nothing like it.”

Would he be comfortable, then, if we start with Rs. 14 lakh per person? Replies Venkat: “Absolutely comfortable. I will not report to IT. I will take it as cash. Every year before the renewal premium comes, you can just give us a call, I will send somebody and collect the cash and get it done. I don’t want PAN number anything. But I can’t give you life cover because the minute I give you life cover I will have to ask you for IT return which means I am exposing this to linking the means on one hand I am taking the cash … linkage … That will be a problem.” It would be done without PAN and without reporting it to the Income Tax authorities, Venkat promises. But there would be no provision for risk cover, and the reason is obvious.

As regards to returns after maturity, Venkat has this to promise: “Absolutely white and tax free. Is account mein nahi aayega. Main aapko bataaoonga kaunsa account mein daalne ko. Usmein daal ke baad mein transfer lena (It will not be credited into this account. I will tell you in which account you should take it. Get it transferred after getting it credited into that account). Because this account will be linked, to ismein nahin aayega (so it will not go into that account). I will give you the details.”

Venkat himself make three profiles for our reporter in which investments are to be made: the politician’s wife is shown as a housewife, the reporter’s wife is shown as a partner in some firm and the reporter himself is shown as a real estate businessman.

But the politician has to be from Chennai, for the following reason. “Agar Chennai ke nahin hai (If he is not from Chennai), then I cannot take it as housewife. I will have a problem. See I have to prove that I have met her. Delhi ka address denge na toh main toh mar gaya (If you give me Delhi address, then I am finished).”

Obviously, Venkat knows that what he was proposing is illegal and wants to play it safe. But at the same time, he is willing to do it even without the required documents. He said: “Kuch bhi nahin Sir. Aap ek date of birth proof bus … account nahin, kuchh bhi nahin. Wo toh side by side hota rahega. Wo toh genuinity [sic] lane ke liye baad mein kar sakte hain. Abhi that is not a compulsory mode to invest. PAN card to zaroorat hi nahin hai (Nothing like that, Sir. We need your date of birth proof only, not account number, nothing else. That will go side by side. We can do it later for the sake of genuinity. Right now that is not a compulsory mode to invest. Even PAN card is not required).”

Has he ever handled such investments involving cash transactions? “Bahut hai. Wohi main bol raha hun na 2005 mein main 50 lakh accept kara tha. Thoda din kam ho gaya because anti-money laundering jab se aaya, sabhi 20 lakh tak to hum log jaate hain. Isiliye 20 lakh ka humne baat hi nahin kiya. Hum aapse 10 lakh hi baat kar rahe hain taki. Aap bhi comfortable rahein hum bhi comfortable rahein. Kisi ko nahin maloom hoga (Many. I tell you that I had accepted Rs. 50 lakh in 2005. Nowadays, this has dwindled because of anti-money laundering law. From then on we go up to Rs. 20 lakh. That is why I didn’t tell you to invest Rs. 20 lakh. I told you to go for Rs. 10 lakh only so that you are comfortable so are we. Nobody will come to know).”
Interestingly, at the fag end of the deal, Venkat claims that he is very honest: “Sir main bahut honest hun ismein (Sir, I am very honest in this).”
Venkateswaran K reaction to the investigation: “NO Comment”


Tag : Cobrapost Operation Red Spider, ,

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