Top Indian Bank Executive Arrested in Bribery Inquiry

Aug 04, 2014 03:48 AM EDT

(Photo : REUTERS/Mukesh Gupta) Laborers load coal on trucks at Bari Brahamina on the outskirts of Jammu, India March 22, 2012. The office of then Indian Prime Minister Manmohan Singh moved to quell an outcry over a reported US$211 billion loss in revenues from the sale of coalfields, after months of pressure over a slew of scandals that have weakened the government.

Indian authorities have arrested the head of state-run Syndicate Bank, Sudhir Kumar Jain, and at least five other people on bribery allegations.

The Central Bureau of Investigation (CBI) said Jain, Syndicate Bank's chairman and managing director, is accused of accepting an US$82,000 bribe from two mining companies at the center of the so-called coal scam.

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The 90-year-old Syndicate Bank is listed on the Bombay Stock Exchange and 67 percent of its shares are owned by the state.

The CBI did not name the source of the bribe.

But, according to The Financial Times, the anti-crime agency suggested Prakash Industries and Bhushan Steel bribed Jain in return for the bank increasing their credit limits so they could participate in the coal allocation scheme of the previous government.

The CBI said other banks were involved in the case and that 12 individuals, including Jain and two directors of a firm based in Delhi, had been named suspects.

The agency also disclosed that CBI officers had raided 20 locations in four cities to look for evidence related to the case and found "incriminating documents."

Jain's home was included in the search, and cash and other valuables were found at the scene, according to the CBI.

Ranjit Sinha, who is the head of the agency, said the arrests demonstrated the new government's determination to combat high-level corruption.

Prime Minister Narendra Modi's government, led by the Hindu nationalist Bharatiya Janata party (BJP), came to power after winning elections in May.

In 2012, BJP accused the then Congress-led coalition government of "looting" the country by allowing the transfer of coal mining blocks to private companies at a very cheap price.

An official audit found that the deal cost the government more than US$33 billion in potential revenue. Earlier estimates put the loss at around US$200 billion.

The coal allocation scam was one of the biggest corruption scandals to hit the previous Indian government, which ruled the country for 10 years.

TagsIndia corruption, India bribery, India bank, coal scam, SK Jain, Syndicate Bank