Fallout of Rs 11,000 crore Nirav Modi scam: CBI trains guns on PNB auditors

Officials have seized Rs 5100 crore in jewellery from stores owned by Nirav ModiAs many as 16 auditors have examined Punjab National Banks PNB accounting books since 2011 so why didnt even one of them raise a red flag about the Rs 11400crore Nirav Modi scam This is the question the Central Bureau of Investigation CBI seeks to answer as the probe deepens This is not the first time that the role of auditors has come under scanner Just a month ago PwC was found guilty in the multicrore Satyam scam and was banned from auditing companies for two yearsThe shutters are down at Nirav Modis Kala Ghoda store in South Mumbai due to raids and seizures over the last couple of days PicsAshish RajePNB recently revealed suspicions that the Nirav Modi credit scam has been going on since 2011 However as the banks annual reports state since 201112 a total of 16 auditing firms have examined the accounting books of the financial institution but not a single one detected the massive fraud A senior CBI officer from Delhi told this paper Multiple agencies are probing the case and role of all those involved including PNB staff and others auditors They will be called in for questioning and further course of action will be taken as deemed fitNirav ModiSenior chartered accountants and lawyers in the city have raised serious questions about the manner in which PNB came out in public claiming to have unearthed a major scam only to shift the blame on two staffers retired deputy manager Gokulnath Shetty and single window operator Manoj KharatAs midday had reported though the CBI does not buy that these two staffers could have pulled off a Rs 11400crore scam on their own Noted chartered accountant Vimal Punamiya agreed The very incident clearly indicates that there was an act of negligence on the part of PNB management and the auditors Every year five different audit firms go over the banks accounts And yet for reasons best known to them they could not detect such a mammoth fraud during the audit process The role of the auditors needs to be probed This will expose the role of bigger players within and outside the bankAlso they have blamed the deputy manager for issuing the Letters of Undertaking LOUs But how was he allowed to remain in the same post for so many years when the norm is to change posts every few yearsNo immunitySenior criminal lawyer Majeed Memon said It is shocking that for all these years such huge irregularities could not be detected that too in a listed nationalised bank The only conclusion to be prudently drawn is that the officials who were supposed to monitor or audit were in connivance with the management and staff of PNB right from the desk officer to the seniormost one They must have been in the know and as such it is difficult to believe that they are not involvedAdvocate Memon added Once the investigation deepens an examination of relevant documents will unveil the wellplanned criminal conspiracy The auditors role will also likely be probed they do not have any immunity midday contacted some of the audit firms mentioned in the annual reports of PNB but they refused to comment R Devendra Kumar amp Associates which is named in the most recent published annual report from 201617 said they no longer audit the banks financesAuditors from 20112017Chhajed amp Doshi R Devendra Kumar amp Associates Hem Sandeep amp Co Suri amp Co SPMG amp Co Shah Gupta amp Co K N Gutgutia amp Co CVK amp Associates Ramesh Kapoor amp Co Borkar amp Muzumdar G S Madhava Rao amp Co Phillipos amp Co V K Verma amp Co Mookherjee Biswas amp Pathak Amit Ray amp Co Sarda amp PareekModi OperandiIn a confidential caution notice issued to various banks on February 12 PNB explained the modus operandi of the racket One juniorlevel branch official unauthorisedly and fraudulently issued LOUs to Nirav Modis companies for availing credit from overseas branches of Indian banks None of the transactions were routed through the core banking system avoiding early detectionExperts sayDinesh Tiwari senior criminal lawyerMost such frauds are committed with due connivance of chartered accountancy firms which issue false certificates or conceal facts pertaining to the financial affairs of the company Of late investigators have started chargesheeting CAs and auditors for criminal conspiracy In this case too the role of auditors will be probedKirit Somaiya MP and Chartered AccountantIt is true that such scams have to have the support and blessing of big people The role of auditors cannot be ignored16No of auditing firms employed by the bank from 201112 to 2016175No of auditors checking the banks finances every yearThe big fat Rs 11400 crore Nirav Modi scam All you need to knowNirav Modi procured fraudulent letters of undertaking from a PNB branch in Mumbai based on which he allegedly secured credit from the foreign arms of several other Indian lendersCatch up on all the latest Mumbai news crime news current affairs and also a complete guide on Mumbai 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