Bangalore August 3, 2013: The Registrar of Cooperative Societies has ordered the management of Amanath Co-operative Bank Limited to take action, including filing criminal and civil cases and taking disciplinary action, against those found involved in financial irregularities to the tune of Rs 102.03 crore.
On July 20, Registrar N S Channappa Gowda gave the direction to the bank management to take action within next 45 days. The registrar is the quasi-judicial authority.
In the just-concluded Legislature session, Cooperation Minister H S Mahadev Prasad announced that steps were being taken to book criminal cases against those who embezzled the bank’s money. But the Opposition parties demanded a CBI probe into the scam for which the government has not agreed.
The bank management will have to send a compliance report to the government within the stipulated time, failing which the cooperation department can take necessary action, including filing police cases and attaching the bank’s properties. The government can also supersede it.
In all, three inquiries have already been conducted into the bank’s transactions — once by the RBI and twice by the cooperative societies. But the inquiry’s findings have been challenged in court.
The Registrar gave the direction to the bank management based on the inquiry report submitted by K P Appanna, who was deputy registrar in 2007. He had investigated how funds were misappropriated by sanctioning loans to fictitious persons from 2002 onwards. The inquiry was conducted after the RBI submitted its inspection report in 2003 on the irregularities.
Appanna’s 129-page report has gone into every instance to establish how the norms were violated by creating false documents. In the conclusion, the report, while putting the loss at Rs 102 crore, holds the following 10 people jointly and severely responsible — K Rahman Khan, President; Abdul Gaffar Haji Lateef, Mohammed Azam Jan (both deceased), S S Peeran, Ziaullah Shariff, Sadath Ali Khan, Aziz Mohammed, Ateeq Ahmed, Hyder Ali Jeevabhai and Jamila Khaleel (all directors). Those who formed the board as on March 30, 2002, were Mohammed Asadulla, the general manager, and A Shafiulla, Branch Manager, N R Road. Rahman Khan, the Union Minister for Minority Affairs, has denied any wrongdoing.
The recommendation by the inquiry authority was to “launch criminal action against the above persons; action for recovery has to be taken against them.” In addition, the following five people have been named as abettors in the crime — K Hidayathulla, Khairunnisa, Naseema Begum, M A Raj, Sadiqa Begum and Noorjehan Begum. They were found to be involved in various types of irregularities, including opening fictitious digital accounts, tampering with the minutes book, creating loan documents, etc.
The accounts of not less than 42 institutions have been examined. It observed that Al-Ameen and Charitable Trust and the educational institutions allied to it were being sanctioned/granted loans, without any rationale, as and when they needed funds for their operations. The bank’s funds were utilised more for the Al-Ameen institutions than for normal banking purposes. This is unethical, says the report.
Why is the government, despite having the inquiry reports, not ready to refer it to the CBI? Mahadev Prasad has stressed that the government is “not silent”. An administrator was appointed to the bank for six years. “We are just following the rules. There should be least interference by the government in matters of a cooperative society. Let us wait for response from the bank on the registrar’s direction,” he said.
According to sources, the RBI proposed three ways to the bank to bail itself out of the present crisis. One of the suggestions is the bank’s amalgamation with a nationalised bank. It is said that the bank’s general body has preferred the merger with Canara Bank. But there is stiff resistance from a section of Muslim leaders as they want the bank to continue to help the community. Besides, such merger will help the defaulters get away from facing action and the bank will lose its valuable properties.