Enter a typical government office and one will find heaps of paper. Retrieving the papers by the government officers is like finding a pin in a hay stack. These persons are so busy or appear to be busy in meticulously following century old systems and procedures that it is very easy to scam them without the department or the government agency realizing the folly until scam is unearthed by auditors or till the scam causes revenue loss. Till technology savvy persons are employed or suitable systems are developed including training of existing staff, scams will continue to be the order of the day. The current story covered by the blog is one such example.
Four Maharashtra government agencies collectively lost Rs. 194 Crores to a conman named Vimal Maluka alias Vimal Barot, senior vice-president of Showman Group, who allegedly availed overdraft facility and withdrew 90% of their bank deposits by forging documents. Modus operandi was very simple. He used to represent a bank promising returns on deposits above the existing market rate. Conniving with bank manager, he would fraudulently avail overdraft facility based on these fixed deposits by forging documents and channelizing the money into various shell companies owned by him. On maturity date he would garner funds so obtained by conning other Companies/ agencies using same modus operandi and repay the amounts to the concerned department/ company through bank account held by one of his shell company. It is intriguing to note that none of these agencies/ companies found anything fishy or questioned the bank as to the reason why the amount was being credited by some unknown company into their bank account and not directly by the bank at the time of maturity. This is the reason of worry that in this fast changing technological environment, people rely on computers so much that they fail to differentiate between a legitimate and illegitimate transaction. One can say that this is a classic example of Mechanical brain engineering at its best.
One will be eager to know where Vimal (currently in Jail) utilized these funds. He brought properties, invested in a film and an IPL team (now defunct). However most of the funds were used to finance his lavish lifestyle since Enforcement Directorate (ED) are as on date able to attach properties of Rs. 24.20 crores only.
NPowersU Expert Opinion
This blog is an eye opener to readers as to the nature of scams that one can expect in the near future. Rather than being worried about them, there are two ways to avoid them-
- Pay attention to small but important details rather than mechanical completion of jobs– Identity check and referring narrations in the bank statement should have been enough for the fraudster to be bought to books in the case under consideration.
- Effective use of technology – Blockchain technology is one such example. Banks (some have already initiated the process), government agencies and large corporates need to invest in this technology which will bear fruits in the future. Use of this technology includes reduced cost of compliance, removal of the duplication of effort in carrying out KYC checks, real-time of transactions, reduced paper work, reduction of operational cost/ lesser probability of errors and frauds. This technology could bring down the cost of transactions to a great extent.
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