Former ICICI Bank CEO Chanda Kochhar and 10 Others Booked for Cheating Tomato Paste Company in Rs 27 Crore Scam

New Delhi: Former ICICI Bank Managing Director and CEO Chanda Kochhar is once again in the midst of a legal battle, this time accused of cheating a tomato paste company for a staggering Rs 27 crore. An FIR has been registered against Kochhar and ten others in the national capital for their alleged involvement in the scam.

The case dates back to 2009 but recently came to light after the Patiala House Court on December 9 ordered the Delhi Police to initiate an investigation. The Economic Offence Wing of the Delhi Police subsequently registered an FIR on December 20, citing allegations of cheating and criminal conspiracy.

The Accused

Those named in the FIR include:

• Chanda Kochhar, former ICICI Bank MD and CEO

• Sandeep Bakshi, CEO & MD of ICICI Bank

• Vijay Zagade, ex-manager of ICICI Bank

• Unnamed officials of ICICI Bank's Global Trade Services unit in Mumbai

• Atul Kumar Goel, MD & CEO of Punjab National Bank

• K.K. Bordia, ex-GM of Oriental Bank of Commerce

• Akhila Sinha, AGM of PNB & the then Branch Head of OBC

• Manoj Saxena, AGM of PNB & the then Branch Head of OBC

• K.K. Bhatia, ex-Chief Manager at OBC

The Allegations

According to the FIR, lodged by Shammi Ahluwalia, Director of P & R Overseas Pvt Limited (Tomato Magic), the accused allegedly conspired to present a fake "Letter of Credit" (LoC) from a foreign bank as a genuine document. The LoC, which was crucial for an export order of tomato paste, was purportedly issued by the Royal Bank of Scotland (RBS) but was later revealed to be from a local Russian bank named RBS Alliance, known for its dubious reputation.

The FIR states that ICICI Bank "fraudulently authenticated the LoC as issued by Royal Bank of Scotland, knowing fully well that the LoC (L/C) was from a local Russian Bank: RBS Alliance." Despite the LoC being amended three times, ICICI Bank allegedly "repeatedly committed folly" in verifying its authenticity.

Also Read: Zomato Faces Show Cause Notice Over Alleged Tax Liabilities worth ₹401.7 Crore

The FIR further alleges that ICICI Bank, as the advising bank in the transaction, failed to properly inquire about the legitimacy of the LoC and the issuing bank. The complainant claims that the bank deliberately ignored red flags indicating RBS Alliance's poor reputation and collaborated with the fraudulent bank to swindle Indian businesses.

The Complainant's Losses

Tomato Magic, a pan-India supplier of tomato paste, had received an export order from a Russian buyer for 1000 metric tonnes of Chinese tomato paste. The order, initially valued at $10 lakh, increased to $18.48 lakh (approximately Rs 8.68 crore) for an additional supply of Iranian-origin tomato paste.

To mitigate payment risks, the order was contingent on a 100% irrevocable LoC issued by an 'A' class bank, with ICICI Bank acting as the advising bank. The wrongful authentication of the fake LoC by ICICI Bank allegedly led to a series of events resulting in a loss of Rs 27.66 crore for Tomato Magic.

ICICI Bank's Response

In May 2011, when confronted by the complainant, ICICI Bank allegedly provided "frivolous" and "untrue" answers in an attempt to evade responsibility. The FIR also notes that Oriental Bank of Commerce (now Punjab National Bank) surprisingly did not challenge ICICI Bank's stance, seemingly accepting the fraudulent information as accurate.

The Investigation

The Delhi Police is now investigating the matter based on the FIR. The outcome of the investigation will determine whether Kochhar and the other accused are guilty of the alleged cheating and criminal conspiracy.

This case has raised concerns about the banking industry's due diligence practices and the potential for fraud in international trade transactions. It is important to note that Kochhar and the other accused are presumed innocent until proven guilty in a court of law.