PracticeAuditDirectors jailed for £358m fraud

Directors jailed for £358m fraud

Trio who conned UK banks out of more than £215m are disqualified from being directors for between nine and 15 years

Three directors of a metal trading firm which conned the banks out of
millions of pounds are facing jail sentences totalling 25 years following a
Serious Fraud
Office
investigation triggered by auditors PricewaterhouseCoopers.

RBG Resources chairman, Virendra Rastogi, 40, was given a nine year sentence
and disqualified as a company director for 15 years for conspiracy to defraud.

Director, Anand Jain, 40, and chief executive, Gautam Majumdar, 56, face
eight and nine years in jail and disqualification as directors for ten and seven
years respectively on the same count.

‘They created a very impressive front that fooled banks, the metal exchanges
in both the UK and USA, and well respected accountancy firms,’ said Judge H H J
Wadsworth.

He said they were involved in ‘years of calculated dishonesty’ and had showed
no signs of ‘remorse’ during the eight- month trial at Southwark Crown Court.

When RBG collapsed, WestLB and GMAC Commercial Credit were owed just over
£128m dollars with total losses to UK banks of £215m.

Between 1996 and 2002, Rastogi, Jain and ran a web of in excess of 300 fake
customers who were supposedly based in the US, Hong Kong, Singapore, Dubai,
India, France and Italy.

While the banks thought they were financing a successful metal trading firm,
quoted in the Sunday Times rich list, they were advancing money to a company
propped up by dishonesty. The ‘customers’ were Rastogi’s henchman based in
addresses around the world who would falsify documentation and purport to banks
and auditors to be independent traders.

The scam was uncovered when an employee in Hong Kong faxed false letters from
various ‘customers’ to Rastogi for review, but mistakenly sent the fax to
PricewaterhouseCoopers, who were RBG’s auditors in the UK.

PwC resigned as the company’s auditors alerting Companies House and the
London Metal Exchange triggering a two-year investigation by the Serious Fraud
Office.

Related Articles

Is predictive analytics the end of the annual audit?

Audit Is predictive analytics the end of the annual audit?

4d Martin Herron, MHA MacIntyre Hudson
Auditors ‘in the dock’ over Carillion as report calls for Big Four break-up

Audit Auditors ‘in the dock’ over Carillion as report calls for Big Four break-up

1w Emma Smith, Managing Editor
PCAOB sanctions former Deloitte Turkey CEOs over altered documents

Audit PCAOB sanctions former Deloitte Turkey CEOs over altered documents

2w Alia Shoaib, Reporter
KPMG South Africa to review past audit work amid fresh scandal

Audit KPMG South Africa to review past audit work amid fresh scandal

1m Alia Shoaib, Reporter
FRC introduces £10m sanctions for Big Four firms

Audit FRC introduces £10m sanctions for Big Four firms

2m Alia Shoaib, Reporter
Ukraine’s PrivatBank files $3bn claim against PwC

Audit Ukraine’s PrivatBank files $3bn claim against PwC

2m Alia Shoaib, Reporter
Grant Thornton to exit FTSE 350 audit market, citing Big Four dominance

Audit Grant Thornton to exit FTSE 350 audit market, citing Big Four dominance

2m Alia Shoaib, Reporter
Big Four dominate FTSE 250 audit market in Q1 rankings

Audit Big Four dominate FTSE 250 audit market in Q1 rankings

3m Alia Shoaib, Reporter