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Dec 31, 2010 at 03:07pm IST

The top banking frauds of all time

New Delhi: The bank fraud at Citibank's Gurgaon branch has shocked consumers. The Reserve Bank of India warned banks earlier this year about an increase in bank frauds, especially in private banks. We take a look at some of the top banking frauds of all time.

1. Jerome Kerviel

Jerome Kerviel is a French trader who was convicted in 2008 for causing trading loss, breach of trust, forgery and unauthorized use of bank Societe Generale's computers, resulting in losses valued at 4.9 billion pounds. The bank said Kerviel was a rogue trader and claimed he worked these trades alone, and without its authorization, assertions that have been met with skepticism from expert commentators and analysts alike.

The top banking frauds of all time

From Shivraj Puri to Jerome Kerviel, some of the top banking frauds of all time.

Kerviel had told investigators that such practices are widespread and that getting a profit makes the hierarchy turn a blind eye. Kerviel published a book in May 2010, in which he alleges that his superiors knew of his trading activities, and that the practice was very common.

2. Vatican's God Bankers

Roberto Calvi was the chairman of Italy's second largest private bank, Banco Ambrosiano when it went bankrupt in 1982. A financial advisor to the Vatican, Calvi headed the Banco Ambrosiano, which collapsed in one of Italy's largest fraud cases following the disappearance of $1.3 billion in loans the bank had made to dummy companies in Latin America.

The Vatican had provided letters of credit for the loan. After the collapse in 1982, Calvi suddenly disappeared from Italy. He was found a short time later hanging from scaffolding on Blackfriar's Bridge, his suit pockets loaded with 11 pounds of bricks and $11,700 in various currencies stuffed in his pocket. London investigators first ruled that Calvi committed suicide, but his family pressed for further investigation. Eventually murder charges were filed against five people, including a major Mafia figure, but they were all acquitted after a trial in 2007. While denying any wrongdoing, the Vatican bank agreed to pay $250 million to Ambrosiano's creditors.

In past decades, two Vatican financial advisers died in the strangest of circumstances. The scandals blackened the bank's reputation, raised suspicions of ties with the Mafia, and cost the Vatican hundreds of millions of dollars in legal clashes with Italian authorities. Now the bank is back under harsh scrutiny - in a case involving money laundering allegations that caused police to seize $30 million in Vatican assets.

3. Nordea Bank Fraud

Internet fraudsters stole around ($1.1m; £576,000) from account holders at Swedish bank Nordea. The theft, described by Swedish media as the world's biggest online fraud, took place over three months. The criminals siphoned money from customers' accounts after obtaining login details using a malicious program that claimed to be anti-spam software.

Nordea said it had now refunded the lost money to all 250 customers affected by the scam. Police have said they suspect organised criminals from Russia used a Trojan (a programme that installs malware on computers), affecting more than 250 customers, leaving a log of information sent to servers in Russia. The attack started when the trojan sent in the name of the bank to the bank’s clients. The sender encouraged clients to download a spam fighting application. Users who downloaded the attached file raking.zip or raking.exe were infected by the trojan haxdoor.ki.

4. Citibank Gurgaon

A banking fraud which could run into a whopping Rs 400 crore was unearthed at Citibank's Gurgaon (Haryana) branch. Funds amounting to Rs 400 crore of 20 high networth customers was allegedly siphoned off by bank executive Shivraj Puri.

Puri is accused of selling investment products to high networth clients claiming that they would generate unusually high returns. It is also alleged that Puri, who is named in the FIR, showed a forged notification of market regulator Securities and Exchange Board of India for obtaining funds from customers. He is also accused of claiming that these products were authorised by the bank's investment product committee.

5. Zoom Developers

Termed as one of the largest banking scams in India, the CBI is investigating the disbursement by 27 banks to Zoom Developers. The ministry of finance has questioned Punjab National Bank, who is the lead banker to Zoom Developers. Nearly 27 Indian banks, with a majority of public sector banks have lent close to Rs 2,700 crore to Zoom Developers. This debt has been admitted in the corporate debt restructuring cell.

6. China Construction Bank

China executed bankers Wang Liming and Miao Ping for fraudulent activity in 2004. Wang Liming, a former accounting officer with the China Construction Bank in Henan, stole 20 million yuan ($ 2.4 million) from the bank using fraudulent papers. Miao Ping was an accomplice in the same case.

7. John Rusnak

John Rusnak was a former currency trader at Allfirst bank, then part of AIB Group, in Baltimore, MD, United States. In 2003 he was sentenced to seven and half years in prison for hiding USD 691 million in losses at the bank, after bad bets snowballed in one of the largest ever cases of bank fraud.

He was transferred from prison to a halfway house in June 2008, to home confinement in September 2008, and ultimately released from home confinement on January 5, 2009, serving just under 6 years.

8. Nicholas Leeson

Nicholas Leeson is a former derivatives broker whose fraudulent, unauthorized speculative trading caused the collapse of Barings Bank, the United Kingdom's oldest investment bank, for which he was sent to prison.

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