IC misappropriation: Idea was to make quick bucks

KATHMANDU, JAN 10 -

A high-level committee formed to investigate the high-scale misappropriation of Indian currency using fake customs clearance documents has concluded that the motive behind the fraud was to make a quick buck by selling the Indian rupee in bordering Indian markets at high exchange rates. “This is the most likely motive behind the IC embezzlement,” said a committee member.

An investigation carried out by the Department of Revenue Investigation (DRI) in September had revealed that IC worth millions was transferred to India through banks by producing fake customs clearance documents on the pretext of importing goods.

The illicit trade of Indian rupee is rife in bordering areas and general public are forced to pay as high as Rs 165 for IRs 100, whereas the exchange rate fixed by the Nepal Rastra Bank (NRB) is Rs 160. Considering the huge amount associated with the scam, the committee led by the deputy governor also explored other possible motives behind the fraud such as capital flight and claiming incentives from the Indian government for exporting goods to Nepal.

“We also investigated whether it was capital flight,” said the committee member.

“However, amid the availability of other easier options such as ‘hundi’ to transfer funds, use of such a complicated process is less likely.”

According to NRB officials, it was also unlikely that the fraud was targeted at claiming incentives from the Indian government for exporting goods to Nepal, as there are very few export items on which the Indian government offers incentives.

Regarding the nine banks through which IC was transferred to India, the panel said they should have been more cautious. “Banks failed to implement the ‘Know Your Customer’ policy properly,” said the committee member. Currently, the committee is preparing the report.

The DRI probe had found that eight firms illegally transferred more than IRs1 billion to India. The investigation has so far confirmed the misappropriation of over IRs 800 million. DRI Director General Shanta Bahadur Shrestha said the department

is now investigating additional embezzlement worth IRs 330 million.

Among the firms found involved in the fraud are Maxwell Computer, Shyam Galla Bhandar, Jaya Mata Di International, Digital World, GS Traders, Jaya Baba Amarnath, Gangotri Galla Bandar and Nitesh Brothers.

Source: Kantipur