Monday, November 28, 2016

RBI in spot? Allegations fly high, it tied up with "blacklisted" British co to supply note printing equipment

A screenshot from De La Rue website
By Our Representative
In the wake of the ban on Rs 500 and Rs 1000 currency notes, a portal run by well-known human rights activist Teesta Setalvad has wondered as to why Reserve Bank of India (RBI) gave away contract  supply machinery for printing notes to a British company, which it alleges was “black-listed”previously.
The portal, www.sabrangindia.in, quotes the official site of the RBI Note Mudran (P) Ltd, which says, “The machinery at Mysore Site has been supplied by M/s. De La Rue Giori, now KBA Giori, Switzerland and that of Salboni by M/s. Komori Corporation, Japan. Both the presses are equipped with sophisticated Security Surveillance Systems.”
Claiming that the RBI has given contract to print notes to De La Rue “without any official announcement being made”, the portal says, “Until April 2016, at least, De La Rue continued to supply paper for this printing, and was re-issued tenders by the Modi government for this highly sensitive activity despite being banned for national security reasons in 2010-2011.”
Terming this “mysterious”, the portal says, the portal quotes an RBI circular, which makes “a vague reference to only presses with sophisticated equipment supplied by De La Rue (now renamed KBA Giori)”, adding, “The company’s own website clearly announces interest and role in printing of the currency.”
It also quotes what is calls “unconfirmed sources from the RBI” to say that, after the De La Rue's alleged involvement in the Panama papers scam in April 2016, this company had been again black-listed from supply of paper”.
It adds, “There is no official explanation why a foreign company, black-listed on national security concerns (2011), was allowed to supply paper again by the Modi government, without any public announcement between 2014 and 2016. There is also no announcement of this reported recent black-listing on any official government, or the RBI website.”
Lately, reports the portal, a Right to Information (RTI) query has been filed to the Reserve Bank of India (RBI) demanding to know whether the paper supplied for the printing of the new notes after demonetization is paper supplied by De La Rue(UK) and Louisenthal (Germany).
The portal also quotes an investment journal to point out that the company banned for national security reasons, De La Rue could be a major player in prime minister Narendra Modi’s Make in India schemes. 
Pointing towards why it wants to be in business with India, the De La Rue site says, "Cash is the most socially inclusive payment method. It has a key role to play in the evolving payments ecosystem with India and as a result, will be around for many years to come", adding, "Non-cash transactions today account for only 22% of all consumer payments."
It continues, "Currency in circulation accounts for 18% of India's gross domestic product (GDP). During 2015 cash usage accounted for 78% of all transactions. Cash is the preferred mode of payment for 78% of merchants."
The portal says, seizures of counterfeit currencies made by the enforcement agencies had revealed that the quality of notes were identical to the legal currency notes, noting, “It was difficult for even the banks to identify the differences.” It adds, “Intelligence reports suggest counterfeit currency notes are printed in a high-security press in Pakistan and smuggled into India and distributed to destabilize the Indian economy.”
The portal further raises alarm that another company, Italy-based Fabriano Securities, which was “also allegedly named in the Panama offshore companies scam has been the supplier for the security thread for the new currency notes after de-monetization.”
The portal says, what also is being “ignored” is is that the Serious Fraud Office (SFO) of the United Kingdom (UK), in 2010, found serious security breaches in De La Rue. In their inquiry, the SFO had uncovered that a number of De la Rue employees had deliberately falsified certain paperspecification test certificates for some of its 150 clients.
It adds, there is also the revelation that De la Rue paid out a 15% commission to a New Delhi businessmen to secure contracts from Reserve Bank of India, and that De la Rue paid £40m in settlement to the RBI for issues in production of paper notes.

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