Need your help

Need your help I find the following mater in news paper "Business line' and faced this type of transaction in my real life while auditing. The entry in the books of accounts is: XXXX party A/c dr 100cr To other liabilities 100cr ( being LC raised vide Lc no:xxxx dated xxx abc bank) Please read the following as published in Business line: "The other case was in Kolkata, involving State Bank of India. One of the bank's branches in that city reportedly opened LCs for purchase of seafood by its customer in favour of a supplier situated in Kolkata. No goods were sold or bought — the buyer and the seller belonged to the same group — and the group enjoyed bank credit on an unsecured basis. When the bank woke up to the shenanigan, the total value of bills drawn under the LCs and unpaid amounted to a staggering Rs 100 crore. The bank reportedly refused to pay the bills already accepted by its customer under the bank's LCs and all those banks that had discounted the bills on the strength of LCs had gone to court to make the opening bank pay. It is understood that, despite the big losses incurred by banks in these sham transactions, the business of opening usance LCs for local trade continues and many private and foreign banks are deploying their surplus funds in bills drawn under the LCs." I need answers for the follwing from experts: 1.Is it fraud to raise LC for local beneficiary in same city?if yes how? 2.Is there any loss to bank with this transaction? 3. "The group enjoyed bank credit on an unsecured basis" i am unable to understand the above sentence. Please explain how the group enjoyed unsecured basis" 4. as a accountant i find this type of transaction in real life in a company what should i do? 5.In this case is there any involvement of bank? i.e is there any mistake of bank? 6.What are the legal complications with this type of transactions- to whom and why thanks