Mumbai, Sept 17: State Bank of India has absolved itself from allegations that it had violated the Foreign Exchange Regulation Act (Fera) in the Rs 133-crore urea import scam of 1996, what with the Enforcement Directorate (ED) maintaining a stoic silence on its bank probe and with the Central Bureau of Investigation (CBI) yet to book the culprits.
The bank had channelled the funds of state-owned National Fertilisers (NFL) urea import contract -- a deal that never materialised -- with the Turkish firm Karsan.
After waiting for two years since the probe by various government agencies began, the bank has now removed the statutory auditor's note about the scam from its 1997-98 balance sheet, a bank official said.
The note in the 1996-97 balance sheet said: ``Liability, if any that may arise on account of foreign exchange remittance of $38 million effected during the 1995-96 on behalf of its clients, a public sector undertaking, without observing some of the conditions precedent to such remittances underrelevant provisions of exchange control manual is not ascertainable as no claim/action has yet been preferred/initiated against the bank...''
The note further said: ``They are unable to express their opinion on the effect, if any, of these transactions on the financial statements as the same is presently unascertainable...''
``The bank's business with NFL has been fully restored,'' the official said. The bank had to plead with the 12 auditors for removing the note, he said.
It was expected that the ED's investigation into the $38-million deal (Rs 133 crore) would fault the bank for Fera violations as it had remitted the entire amount in foreign exchange without the approval of the central bank. The ED investigation was carried out at the behest of the Reserve Bank of India as the central bank had refused permission to remit foreign exchange.
``In the entire transaction the bank neither lost a penny nor had accepted the fact that we violated Fera norms,'' a bank official said.
The bank had suspendedfour officials after the deal came to light, and the bank's auditors attached a note in the balance sheet subsequently.
Separate investigations were launched by different investigative agencies, and these agencies have not found the bank guilty of any misdeed so far, the official said.
``Nobody knows the findings of the ED's investigation, and we do not want to wait beyond two years for its findings,'' he said.
All the four officials of the Delhi branch who were suspended two years ago for facilitating the transaction have been reinstated recently. These officials are S Sachdeva, SD Malhotra, K Vikarm, KL Batra.
According to the auditors, the note on the balance sheet statement was in accordance with the requirements of the listing agreement Clause 32 with stock exchange and is based on and in agreement with the corresponding profit and loss account and balance sheet of the bank covered by the report of June 19, 1997, to the president of India.
The CBI had alleged in its chargesheet that SambasivaRao, along with former prime minister Narasimha Rao's son Sanjeeva Rao, Mallesam Gaud and some others, had conspired to get government contracts worth of Rs 133 crore in a meeting in Hyderabad in February 1995.
In pursuance of the deal, they had invited the London-based Brazilian businessman Pinto to come to India with some papers for signing the contract.
CBI alleged that Indian co-conspirators had received kickbacks worth $4 million through hawala channels.
The kickbacks received in India were first deposited by Karsan in the account of a Dubai-based firm, Edible Foodstuff Trading, and was then re-routed to Hyderabad through hawala or illegal channels.
Sambasiva Rao had allegedly shared the spoils with other Indian co-conspirators.
NFL had awarded the contract to Karsan in October 1995 after modifying the earlier July 1995 contract with it, and the entire $38 million was paid in advance.
Not a single grain of urea was supplied by Karsan till June 30, 1996 -- the last date for fulfilling thedeal. The CBI had registered the case immediately after the expiry date.
Besides Sambasiva Rao, Sanjeeva Rao, Goud, Pinto and the Karsan officials, others facing trial are former NFL managing director CK Ramakrishnan, its former executive director DS Kanwar and Prakash Yadav, son of former fertiliser minister RLS Yadav.
Except Karsan officials and Gaud, all other accused are now on bail, while Pinto is yet to be extradited from Britain.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.