Citi to compensate fraud-hit customers

Citibank is working on a compensation package for customers duped by its relationship manager Shivraj Puri.

"We are in touch with our customers who were affected in the Rs 400-crore (Rs 3-4 billion) fraud and working towards awarding them a fair compensation", the bank said in a statement. 

Puri had lured 40 high net-worth individuals and corporate entities to invest in a bogus investment scheme promising high returns, while he diverted the funds to the stock market.

His victims included promoters of the Hero Group (Rs 250-crore) and Helion Advisors Managing Director Sanjeev Aggarwal (Rs 33-crore), among others.

A person familiar with the matter said the settlement amount can be anything between Rs 300 crore and Rs 400 crore ($66-$88 million). Citi officials, however, declined to confirm the amount.

Last week, the company said it was investigating transactions based on forged documents, but refrained from declaring the amount of money involved in the fraud.

"We identified suspicious transactions at our Gurgaon branch in early December and immediately reported the matter to law enforcement and regulatory authorities," the statement said.

The global banking major said it will also continue to support the investigating authorities until the matter was resolved and 'brought to its logical conclusion".

Puri has been remanded to 14 days judicial custody, till January 28, by a local court. He was taken into seven days police custody on December 30 after the scam was detected. Later, the police remand of Puri was extended for six days on January 6 and then, subsequently, for two days on January 12.