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May 16, 2002 | 0650 IST
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Rs 700 million diverted from Seamen's PF: Ketan Sheth

Renni Abraham

Giltedge chief Ketan Sheth, who surrendered before the Bank Securities and Fraud Cell of the Central Bureau of Investigation in Mumbai, refused to accept that more than Rs 700 million was siphoned off from the Seamen's Provident Fund and routed to the government securities deals.

A CBI source said: "During interrogations, Sheth said of this Rs 700 million, Rs 240 million was spent on the advertising blitzkrieg undertaken by Home Trade. He said he lost Rs 250 million in 'satta' and in speculative trading in the equity market."

CBI officials added that Sheth admitted that much of the remainder of the Rs 700 million was spent on extravagant foreign jaunts and for bribing co-operative bank officials to secure a clear line of financing for purchasing government securities.

Seth's statements to the Bank Securities and Fraud Cell seem to indicate that little of the Rs 928 million -- Rs 1 billion, including interest -- is recoverable.

The CBI cell has restricted its investigations to the amount diverted from the Seamen's Provident Fund. The issue of seven Maharashtra co-operative banks having lost Rs 2.62 billion is being investigated by different state government agencies.

However, CBI officials are taking Seth's admission with a pinch of salt. They hope to cross-check his version of events with that of Home Trade CEO Sanjay Agarwal, who will be interrogated to nail lies in either's testimony.

A government official involved with the state government's probe into the gilts scam, said: "As much as 30 per cent of the amount sought was offered to co-operative bank chiefs by Agarwal and his associates to procure finances for their government securities play. Many probably thought that because government papers were reliable investments a bank could rake in profits through these brokers, while they themselves benefited financially."

Sheth has been charged by the Bank Securities and Fraud Cell under Sections 409 (criminal breach of trust), 420 (cheating), 467 (forgery for the purpose of cheating) and 468 (prevention of corruption).

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