Hero group admits to loss in Citibank fraud

Dec 31, 2010 |

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Dec. 31: Hero group said on Friday that it had invested Rs 28.75 crore in a fake scheme of Citibank floated by one of its employees as it seemed like a perfectly legal investment option. Meanwhile, RBI has also initiated a probe into the fraud which is pegged at between Rs 200 to Rs 400 crore.

The relationship manager at the Gurgaon branch of Citibank, Shivraj Puri had sold fake schemes to high networth individuals (HNI) which promised high returns. He falsely claimed that these products were authorised by the Citibank’s investment product committee. Puri was arrested on Thursday.

The Hero group clarified that Hero Honda Motors Ltd had no involvement in any of these investments. This is for the first time that the company admitted that it was one of the victims of the Citibank fraud.

“The exposure of the B.M.L Munjal controlled Hero Group in this case is only via its entities, and is Rs 28.75 crore. Hero group is disappointed to learn that it has become a victim of the fraud under question,” said the company in a statement.

It said that the company was taking appropriate action and has also initiated a dialogue with the relevant authorities and Citibank to recover its dues. The Gurgaon police commissioner, Mr S. S. Deswal said that the majority of money invested by Puri of HNIs and corporate entities was safe as they have been invested in financial instruments.

Meanwhile, the Reserve Bank of India on Friday said it has initiated a probe into the Rs 300 crore fraud at Citibank’s Gurgaon branch and would soon issue a statement in this regard.

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