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GTB 'discharges' senior officials

BS Bureaux

Global Trust Bank said on Saturday it had "discharged from service" several senior officers after an internal review by the board of directors.

In a press communication, the bank said the board "had examined, in detail, the reasons for some of its accounts becoming irregular, to understand the deviations, lapses and to fix responsibility."

"The findings have revealed certain deviations and serious irregularities in adhering to the laid down procedures as well as certain internal guidelines of the bank," the bank said, justifying its decision to "discharge some of the bank's senior officers from the services of the bank."

The bank said: "All these steps were taken in the process of clearing up the problems in the bank."

The GTB board's decision at its meeting in Mumbai last Thursday is the culmination of events that started eight months back after the board launched detailed investigations into the irregularities in a few key accounts said to be linked with Ketan Parekh.

According to sources in the bank, the board found that there were deviations and lapses in sanctioning and monitoring a Rs 2-billion loan to Zee Telefilms from the bank's Bandra (Mumbai) branch, a Rs 2.30 billion loan to Ketan Parekh firms from its Fort (Mumbai) branch and a Rs 2-billion loan to HFCL from the bank's Nariman Point (Mumbai) branch.

The board's findings have been supported by an independent audit by accounting firm Ernst & Young.

The board not only sacked the heads of all the three branches, but also those at the helm of affairs at the corporate office in Hyderabad, including Sridhar Subasri, executive director, whose family holds about a 3.5 per cent stake in GTB.

Sridhar Subasri had resigned from the bank's board in August last year, but continued to work as executive director.

According to the bank's annual report for 2000-01, Subasri is a "promoter" of the bank and is listed as "promoter-executive director."

According to sources, other sacked officials include the bank's president, K A Chowdary, senior vice-presidents M V S Nageswara Rao, B N Prakash and K V Rao, and vice-presidents S R Krishna Murthy and S R Kalluraya.

Those whose services have been terminated can appeal against the decision to the board.

The next meeting of the board is scheduled some time in the third week of April. Of the seven officials discharged from service, six had worked earlier in Vysya Bank along with Ramesh Gelli, prior to the establishment of GTB; five of them have been at GTB since its inception.

It is learnt that the board has found that some of the post-dated cheques submitted by HFCL and securities deposited by KP firms were returned to the borrowers before discharge of the loan amount. In the case of Zee accounts, the problem was the failure to monitor the end use of the loan funds.

However, Zee and HFCL accounts were up to date on interest payments as on December 31, 2001, sources said.

Earlier, the bank had initiated a procedure to strengthen its internal control system and set up a recovery mechanism to follow up on problem accounts.

Sudhakar Gande, managing director of the bank said: "We now have a platform for rapid growth, given the high caliber of our human resources, our information technology infrastructure and the vastly revamped internal control and procedures."

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