Indian held for £70m con bid at HSBC - TOI - 03 May 08

Indian held for £70m con bid at HSBC

UK Police Nab The Staffer After Bank Raises Alarm
The London police have arrested and charged an Indian-origin employee of HSBC Bank in London for an attempted fraud worth nearly £70 million ($130m). The attempt by 25-yearold Jagmeet Channa was discovered last week at HSBC’s securities services division, which settles trades for clients. A payment to a bank reportedly raised suspicions at the division in HSBC’s head office building at Canary Wharf and the police were called. A police spokeswoman said Channa, from Ilford in Essex, was charged on April 25 with conspiracy to defraud, money laundering and abusing a position of trust. He was remanded in custody until June 25, when he will appear at Southwark Crown Court. The police said three other men aged 26, 33 and 38 were on police bail in connection with the investigation. HSBC said that no customer funds were involved and no transactions were disrupted. ‘‘HSBC is cooperating fully with a police investigation into an alleged fraud at the bank. As the matter is before the courts, we cannot comment further,’’ a bank spokesman said. He, however, clarified: ‘‘No customer funds were involved, no transactions were disrupted, and no customer or bank funds were lost.’’ Banks around the world have tightened anti-fraud systems after Societe Generale of France suffered losses of $7.5m in the fourth quarter from the biggest rogue trading scandal in history. Kerviel was able to make billions of pounds of unauthorized deals without being detected by his bosses. Bank officials claim that throughout 2007, Kerviel had been trading profitably in anticipation of falling market prices; however, they have accused him of exceeding his authority to engage in unauthorized trades totalling as much as $7.5m, a figure far higher than the bank’s total market capitalization. Bank officials claim that Kerviel tried to conceal the activity by creating losing trades intentionally so as to offset his early gains. In March, another rogue trader was exposed at American futures trader MF Global, a former subsidiary of UK hedge fund Man Group. In these cases, neither trader appears to have been acting primarily to line their own pockets. Instead it appears that they got carried away with risky bets that went wrong. The frauds have turned the spotlight on bank controls, suggesting many such cases might only be waiting to be discovered. AGENCIES