PNB fraud favouring Nirav Modi started in 2008, arrested bank officials tell CBI

The practice of illegally issuing Letters of Understanding LoUs and Foreign Letter of Credits FLCs and then rolling them over to favour Nirav Modi and Mehul Choksi groups started in 2008 and continued till these were discovered in January this year according to CBI officialsThe illicit activities resulting in fraud of Rs 11300 crore occurred under the nose of top Punjab National Bank officials but they claimed to be unaware of the scamThe revelation came to the fore during questioning by CBI officials of Rajesh Jindal who was holding the charge of Mumbaibased PNBs Brady House Branch Head between August 2009 and May 2011 Gokul Nath Shetty a retired Deputy Manager from the same branch who retired in May 2017 Bechu B Tiwari Chief Manager in charge of Forex Department Yashwant Joshi Scale II manager of Forex Department and Prafful Sawant Scale I officer exportThe officials questions said they merely continued with the practice which is said to have started in 2008 It was not immediately clear who was in charge of the Forex Department when the illegal practice beganThe Central Bureau of Investigation CBI officials said the alleged multicrore fraud by issuing LOUs and FLCs for sanction of loan to diamantire Nirav Modi and his uncle Mehul Choksis group of firms continued during Jindals tenure Jindal posted as GM Credit at PNBs Head Office in New Delhi was heading the second largest branch of the PNB when the practice of issuing the LoUs without sanctioned limits continuedJindal was arrested on Tuesday night after his daylong questioning in Mumbai He was the 12th accused person to be arrested in the case so far The CBI investigators had managed to get his custody till March 5 from the special CBI court on WednesdayTiwari Joshi and Sawant were also arrested on Monday for their alleged role in the scam and will remain in police custody till March 3All five PNB officials arrested so far were part of the forex department at the banks Brady House branch at the time of the fraud took place said officials adding these employees in collaboration with the staff and associates of the firms headed by Nirav Modi and Choksi commited wrongdoings for personal gainsThe first FIR in the scam registered on January 31 alleged that Shetty and a single window operator Manoj Kharat during their forex department posting fraudulently issued eight LoUs which are a form of bank guarantee equivalent to Rs 280 crore on February 9 10 and 14 2017 favouring the Nirav Modi companies to Allahabad Bank Hong Kong and Axis Bank Hong Kong without following prescribed procedureIt added that the funds raised for import bills were not utilised for such purposes in many cases Shetty and Kharat arrested last week are currently in CBI custody until March 3PNBs employee Tiwari in his capacity as Chief Manager was to monitor Shettys transactions However Tiwari told the interrogators that during 201517 he did not monitor the fraudulent and illegal LoUs issued by ShettyAn offcial close to the investigation said that Tiwari issued three circulars on February 19 2016 February 7 and March 14 2017 purportedly for the sake of keeping a check on the LoUs sent through the SWIFT code of the PNBs Brady House Branch without any name However he neither followed it up nor took any steps to see why his instructions were not followed by Shetty Joshi or SawantTiwars deliberate acts of omissions led to the continuance of concealment and large scale liabilities of PNB to the foreign banks said the officialThe CBI filed the first FIR against Diamond R Us Solar Exports and Stellar diamond whose partners have been named as Nirav Modi his brother Nishal uncle Mehul Choksi and wife Ami who left the country earlier in early January The second FIR was filed on February 15 for an amount of Rs 488672 crore against the Gitanjali group headed by ChoksiCBI officials said details of additional amounts of around Rs 6400 crore would be added to the first FIRThe second FIR also names 11 directors of the three Cholksi owned Gitanjali group companies Gitanjali Gems Ltd Gili India Ltd and Nakshatra Brands LtdThe PNB fraud came to light on January 16 when officials of Nirav Modi companies approached the bank for buyers credit without collateral saying they had been getting such facility for years The bank said that the official who had earlier allowed such illegal facility through LoUs and FLCs had retired by then and on checking by officials the whole fraud unravelledCatch up on all the latest Crime National International and Hatke news here Also download the new midday Android and iOS apps to get latest updatesThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever