Koda scam: Govt seeks audit of Union Bank branches

Taking a serious note of Union Bank of India (UBI) not reporting high-value transactions to it, the government has asked the bank to immediately carry out an audit of all its branches.

New Delhi: Taking a serious note of Union
Bank of India (UBI) not reporting high-value transactions to
it, the government has asked the state-owned bank to
immediately carry out an audit of all its branches to check
for such large deposits that have gone unreported.

The Income Tax department, during a probe into alleged
money laundering by former Jharkhand chief minister Madhu
Koda, had stumbled on a bank account at one of UBI`s branches
in Zaveri Bazar in Mumbai where approximately Rs 214 crore had
been deposited in cash between January 5 and March 30,
2007.

The bank, whose chairman has been summoned by the Income
Tax department in the Koda probe, has now been asked for an
audit of all accounts of Union Bank of India, suspecting that
the bank`s branches throughout the country may not be
following the norms.

"Not taking cognizance of transactions of such serious
nature by you and non reporting (of these) could have serious
implications for the country. It is likely that your branches
all over the country might be having many more such accounts
with whopping cash deposits therein which have gone
unreported," said a letter to Union Bank of India CMD MV Nair.

The bank officials did not comment immediately.

Manoj Punamia, stakeholder in Balaji group, had earlier
said that the company had no role to play in the Koda episode.
However, there has been no word from the group after the Tax
and ED authorities questioned him.

The IT department, which summoned Nair, has said that the
bank did not furnish details of cash transactions worth more
than Rs 10 lakh by Balaji Bullion Corporation and Balaji
Bullion Bazar, two companies alleged to have helped Koda.

Union Bank`s Zaveri Bazaar branch in Mumbai had accounts
of Balaji Bullion Bazaar and Balaji Bullion Corporation where
there were cash transactions worth crores and were not
reported to the Financial Intelligence Unit.

While in one company there were cash transactions worth
Rs 214 crore between January and March 2007, in another
company there were cash transactions worth Rs 644 crore during
2006 and 2007.

The department, in the letter to Nair, has also said,
"You are requested to kindly consider ordering a thorough
audit of all accounts in your bank and furnish details of all
those accounts which are having such cash deposits or which
are of suspicious nature."

Under the Prevention of Money Laundering Act, banks are
required to furnish to the Financial Intelligence Unit -- a
statement of all cash transactions of more than Rs 10 lakh.

The non-reporting of heavy transactions by a state-owned
bank has raised several questions about the government`s
policy on checking huge money flow and now officials in the
Finance Ministry were discussing on plugging the loopholes to
make the PMLA more stringent.

Bureau Report

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