05/02/2020 7:30 AM IST | Updated 05/02/2020 1:09 PM IST

Exclusive: CBI Whistleblower Says Employees' Cooperative Laundered Money After Demonetisation

On November 8, 2016, the day Modi announced the note ban, members of the thrift and credit society run by CBI employees deposited over Rs 31 lakh in cash with it.

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Representative image. 

NEW DELHI — A cooperative society run by employees of the Central Bureau of Investigation (CBI), the country’s premier anti-corruption agency, accepted significant sums of demonetised Rs 1,000 and Rs 500 notes immediately after these high-value notes were scrapped by the Narendra Modi government on November 8, 2016, according to a whistleblower complaint accessed by HuffPost India.

In his complaint, whistleblower and CBI employee Pankaj Kalra characterised this collection of demonetised notes as “money laundering”. Kalra first filed his complaint with the Registrar of Societies in March 2018, with a reminder the following year in March 2019.

The income tax department has also asked the society to furnish details of these transactions, HuffPost India has learnt.

On November 8, 2016, the night that demonetisation came into effect, members of the CBI (MHA) Employees’ Cooperative Thrift And Credit Society deposited a little over Rs 31 lakh in cash with the society. By way of comparison, society members deposited only Rs 3.23 lakh in cash deposits with the society on November 7, 2016, the day before demonetisation, according to information provided by the society in reply to an inquiry posed by the Income Tax department.

Over the next few weeks, CBI employees continued to deposit significant amounts of cash with the credit society. On November 11, 2016, they deposited approximately Rs 11 lakh in cash (compared to only Rs 12,000 by cheque), and on November 15, CBI employees deposited Rs 14.5 lakh in cash (compared to only Rs 22,000 by cheque), according to society records.

 “We believe that over 100 employees of the CBI who were members of the society may have deposited more than Rs 75 lakh in the period till December 30, 2016,” a member of the society, seeking anonymity to speak freely, told HuffPost India.

While the Union government had set a deadline of December 30, 2016, for specially designated banks and post offices to accept demonetised notes, citizens had to directly approach these designated collection centres and provide KYC details when they deposited the funds. The CBI employees’ credit society, as the complaint notes, was not empowered to collect these notes.

The CBI (MHA) Employees’ Cooperative Thrift And Credit Society was formed in 1973 by serving CBI employees and now has over 1,500 members who are on the permanent rolls of the agency. CBI employees must deposit Rs 20,000 to become its members, and pay Rs 200 every month as a compulsory deposit. In return, members can get loans upto Rs 2,00,000 at an interest rate of 12% per annum. 

HuffPost India
Documents show that the managing committee of the society passed a resolution to accept old currency notes to aid the “recovery of loan from the members” who had been “in default in repaying their loans and interest since long”.

Resolution to accept old notes

On November 9, 2016, the day after Prime Minister Modi’s announcement, documents show that the managing committee of the society passed a resolution to accept old currency notes to aid the “recovery of loan from the members” who had been “in default in repaying their loans and interest since long”.

The resolution, which the managing committee claimed was passed at “the request of members”, said the old currency notes should not be accepted as part of the regular compulsory monthly deposits made by members. “The treasurer should ensure to obtain the requisite particulars as per the Government Notification from the member who deposits such currency,” the resolution concluded.

The committee resolution recorded that the Assistant General Manager of the Corporation Bank branch at the Central Government Offices Complex in New Delhi, where the society had its account, had agreed to accept the old currency notes in the account of the society till December 30, 2016, the date specified by the government for accepting demonetised currency notes.

Lalit Kumar Sharma, the current president of the society, told HuffPost India that the society was cooperating with the Income Tax department, which had sought details on these transactions.

“The matter pertains to the tenure of previous managing committee,” Sharma said. “The new managing committee has just taken over. I don’t know anything about it except that the Income Tax department had sought details about it and the society has provided details to the Income Tax department.”

Whistleblower Kalra, who is a CBI employee and a member of the society, declined to comment on the issue.

The CBI has washed its hands off this issue, claiming the country’s premier investigative agency has no administrative control over a cooperative society run by its own employees.  

 “It is a society run by the employees of the CBI and the agency has no administrative control over it. Many government departments have similar societies. We cannot comment on its affairs,” said a CBI spokesperson. The spokesperson declined to comment on whether it would investigate its own employees.

The Bureau’s hands-off approach to the issue is in sharp contrast to its enthusiasm in pursuing similar cases of currency conversion post-demonetisation.

In a press statement issued on the first anniversary of demonetisation, the agency had stated that it had registered 77 cases, and begun seven preliminary inquiries, into alleged instances of money-laundering and unaccounted wealth. The total money involved was Rs 395.19 crore, the press release said. The CBI also claimed to have followed up on more than 500 tip-offs from the general public and other government agencies.

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