PNB Fraud: What Has Happened So Far. Ten Things To Know

Alicia Cross
February 19, 2018

The opposition party, India National Congress, said Prime Minister Narendra Modi and his cabinet allowed Nirav Modi to leave the country, despite knowing about the alleged fraud (The Times of India).

The main accused billionaire jeweller Nirav Modi, his wife Ami Modi, brother Nishal Modi and his business partner and uncle Mehul Choksi have fled India.

The accusations against the two relatively junior PNB officials were detailed in the lender's disclosure, and also contained in a preliminary police report.

The CBI's move comes after the agency on Saturday arrested former PNB Deputy Manager Gokulnath Shetty, single window operator Manoj Kharat and group's authorised signatory Hemand Bhat. The CBI has already arrested three persons, including the 2 PNB staffers, who have been sent to the judicial custody till March 3. No charges have yet been laid.

Meanwhile, the PNB filed a second complaint with the CBI on February 13.

Kharat's uncle told Reuters the PNB employee was "just following orders of superiors" and added "he wasn't aware of what he is doing". Among those that offered credit to Choksi and Modi, famous for his chain of stores stretching from NY to Beijing, were the Union Bank of India, Allahabad Bank and Axis Bank, the tax note said. "Firestone Diamond International is one of the companies that Nirav Modi runs". PNB alleges that Modi and Choksi worked with Shetty, who was posted at a PNB branch in Mumbai from where the fraud originated.

Of the three fraudulent remittance, one remittance was made through Standard Chartered Bank, New York, to a Dubai based bank for $5,00,000 which was blocked immediately and was returned to City Union Bank, it said. "Neither my wife, sons nor me have anything whatsoever to do with Gitanjali or Nirav Modi companies", he said in a statement.

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The ED team members then searched the outlet and seized diamond studded jewellery worth around Rs 1 crore from the locker, the officials said.

Raids were being conducted across India by the Enforcement Directorate, and included the seizure of about 56.7 billion rupees ($883 million) in diamonds, gold, precious stones and jewelry, the Press Trust of India said in a separate report on Saturday.

Six properties in Mumbai belonging to the jeweller were also sealed.

In last few days, the ED and the I-T department had zeroed in on about 200 dummy or shell companies in the country and overseas that were being used to route or receive funds as part of the alleged fraud. The bank, which has $120 billion in total assets, has lost more than a fifth of its market value since it disclosed the fraud. It is surprising that despite regular audits of these banks, either by internal auditors or external auditors, sometimes even by the Reserve Bank of India (RBI), this contingent liability, which was there on the PNB's balance sheet, remained unnoticed for so long. The Central Vigilance Commission (CVC) summoned the PNB management and Finance Ministry officials to appear before it.

The RBI did not reply to an emailed request for comment.

The officials at the branch were asked by CBI sleuths about the process of sending Swift messages - notifications sent by banks to transfer funds internationally, and the functioning of internal software of the bank, they said.

Other reports by Free-Prsite

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