India's Andhra Bank clarified that its exposure to Sterling group companies totals about 11.5 billion rupees, following reports that authorities are investigating a former director of the bank in connection with a 50-billion-rupee fraud case involving Sterling Biotech.
The state-run bank said March 12 that it is the lead bank of a consortium in the case of two companies of the Sterling group. It also said it reported its exposure to the group accounts as fraud to the Reserve Bank of India in December 2017 amounting to 5.15 billion rupees. The bank accused the Sterling companies of money laundering and had lodged a formal complaint with India's Central Bureau of Investigation.
India's Enforcement Directorate, the financial crime watchdog, filed additional charges against Anup Garg, a former director of the bank, in relation to a more than 50-billion-rupee fraud case, Reuters reported March 12. The bank clarified that Garg was not a director as media reported but a chartered accountant director of the bank from 2006 to 2009. The bank added that Garg was neither an employee nor a whole-time director.
Authorities alleged that Garg and senior executives of Sterling Biotech conspired and falsified accounts to allow the biotech company to obtain a higher amount of loans than it would have been able to. The federal police had already filed a complaint in the fraud case in October 2017.
Garg also allegedly received bribes from Sterling executives between 2008 and 2009.
Reuters could not reach Sterling Biotech executives or Garg for comment.
India's state-owned banks have been beset by several fraud cases, including the Sterling Biotech fraud case. A US$2 billion fraud disclosed in February by India's second-largest state bank Punjab National Bank shocked the market and sent shares of several state banks tumbling. Andhra Bank shares closed 6.7% lower at 35.95 rupees per share on March 12.
As of March 12, US$1 was equivalent to 64.99 Indian rupees.
