Mumbai: An employee of consumer goods maker Godrej Consumer Products Ltd or GCPL, has embezzled gold worth crore of rupees, that has come under the radar of the economic offences wing (E0W) of the Mumbai police, after some city based jewellers failed to receive dues, making it one of the biggest embezzlement cases involving an Indian company in recent times.
Five city based jewellers and one from Kolkata, who used to supply gold coins to the company, said that GCPL is refusing to pay them their dues because a senior employee forged an order and embezzled the coins.
The company used to buy gold coins to give it to retailers and distributors as an incentive for sales. City-based Orra Diamond Jewellery, Cygnus Jewellery, Asmi Jewellery, Basanti Gold Pvt Ltd, Hiralal Jain Enterprises and Kolkata based P C Chandra Jewellers together claim Rs25 crore from GCPL.
However, the company said the order was placed “illegally without any authority” by one of its former employees Amit Gaine.
“(He) falsely projected himself as acting on behalf of the company. Upon further investigation, it also came to our knowledge that he had forged signatures of some of our officials and created false purchase orders, e-mails etc.,” GCPL said in a statement.
“The company specifically disowns all such illegal acts committed by Amit Gaine and states that Amit Gaine is himself responsible for these purported transactions with outsider parties. The company is not liable for the claims arising out of the dispute between the outsider parties and the individual who has committed the fraud,” the company in response to Mint’s queries said.
The jewellers, however, say that Gaine was the deputy general manger of the company and orders were always officially placed by the company through him.
Sunil Jain, proprietor at Hiralal Jain Enterprises, a company which supplies corporate gifts said Godrej owes him Rs2.5 crore for gold coins supplied in January.
“I have been supplying coins to the company since September last year and there was no problem in payments. I am a registered vendor with the company. But in the last instance the payment did not come till the second week of February,” he said.
Jain said the company called them for a meeting on 18 February “they also sent us a letter by their advocates on 19 February 2010 saying that they were looking into the matter.”
“But after sitting over the issue for a month they wrote to us on 15 March that they have nothing to do with purchases made by Gaine. They also filed a complaint with EoW on 18 February, without telling us when we met them. We are shocked at the way GCPL has treated us,” he said.
The jewellers then approached the EoW of the Mumbai police against Godrej claiming their amount.
GCPL has also filed a complaint against Gaine, who is now in judicial custody. “The company has already issued a notice to Basanti Gold Pvt. Ltd. and Harilal Jalan Enterprises for making incorrect, wrongful and defamatory statements against us,” GCPL said.
P Ugle, DCP at the EoW confirmed that his department is investigating cases involving GCPL.
Two other jewellers Asmi and Basanti said they have been supplying coins to the company since 2008, with Gaine being their one point contact.
Hitesh Sanghvi a lawyer representing Basanti said GCPL owes his client Rs8 crore. He is preparing to send the company a legal notice to recover his dues.
“I have already drafted the notice and will send it to the company tomorrow or the day after. If they don’t pay up within a month, we will approach the Bombay High Court and are even thinking of filing a winding up petition against the company,” he said.
Arpinder Singh, partner and national director, fraud investigation & dispute services, at consultancy and audit firm Ernst &Young said he was not surprised with this case given that Indian businesses mostly work on relationship and trust and confirmation process is weak.
“In this case a third party arbitrator should check the evidence like whether, the purchase order was a formal one, whether the arrested employee has any disproportionate assets and whether there was anyone else dealing with the jewellers,” he said.
Singh said such frauds may rise going forward if companies and vendors don’t cross check their balance sheet because “economic growth brings more spending and more business and companies are only concerned about building revenues.”
Late last year a similar case at software company Wipro Ltd, came to light after some bankers alerted the company in December about the lack of funds in an account.
Anup Kumar Agarwal, a chartered accountant joined the company as an intern in 2006, and was later promoted as an assistant manager in a division of the finance department had powers to authorize payments on behalf of Wipro. On 23 December, Agarwal, 28, was found dead on a railway track in east Bangalore.