Magazine article American Banker

India Won't Let Citicorp, BankAmerica Repatriate Earnings in Wake of Scandal

Magazine article American Banker

India Won't Let Citicorp, BankAmerica Repatriate Earnings in Wake of Scandal

Article excerpt

The Indian government has rejected parliamentary pressure to revoke the licenses of Citicorp and BankAmerica for their involvement in a major financial scandal, but has barred the two banks from repatriating earnings for the April 1991 to March 1992 financial year.

The government also did not rule out further legal action against the 40 banks and brokers involved in the scandal, saying those found guilty would be punished.

A parliamentary report released last week charged the two institutions, together with Britain's Standard Chartered Bank PLC and ANZ Grindlays, an Australian bank, of involvement in a long-running scheme that illegally diverted government securities and extended unauthorized credits to brokers for stock market speculation. The banks were further accused of misreporting their books.

Losses of Up to $1.3 Million

A crash at the Indian stock market, which came directly after news of the scandal broke in April 1992, is estimated to have caused losses of up to $1.3 billion.

Standard Chartered alone has acknowledged losing some $240 million and ANZ Grindlays is estimated to have lost over $100 million. Both Citicorp and BankAmerica have denied involvement in illegal operations.

In a statement released last week after the parliamentary report was released, Citicorp reiterated that it was not involved in the creation and trading of fraudulent bankers' receipts, a key instrument used for market speculation. …

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