PNB Scam: Passports of Modi, Choksi Revoked; ED Expands Probe
The Rs 11,000 crore fraud extends past PNB to other lenders – SBI, Union Bank, Axis Bank and Allahabad Bank.
The Nirav Modi Scam
India's second largest state-owned lender Punjab National Bank disclosed on 14 February that it was the victim of the country’s largest bank fraud. PNB revealed that fraudulent transactions by billionaire jeweller Nirav Modi and related entities amounted to $1.77 billion (or over Rs 11,000 crore).
In a complaint to the Central Bureau of Investigation, the bank said that Modi and the companies linked to him colluded with its officials to get guarantees or Letters of Undertaking to help fund buyer’s credit from other overseas banks. The funds, ostensibly raised for the purchase and sale of diamonds, were not used for that purpose, PNB alleged.
Later, it was revealed that the fraud extended past PNB to other lenders like State Bank of India, Union Bank, Axis Bank and Allahabad Bank.
Modi, as it turned out, left the country on 1 January. The CBI has approached the Interpol for help in locating Modi and his family. The agency has also registered a fresh FIR against Mehul Choksi, Modi's maternal uncle and the promoter of Gitanjali Group, who is also named in the fraud.
(With inputs from PTI and ANI)
ED to Seek Info from Over Dozen Countries on Nirav Modi, Choksi's Assets
Widening its probe into the PNB fraud case, the Enforcement Directorate will soon send judicial requests to over a dozen countries for obtaining information about the overseas businesses and assets of diamantaire Nirav Modi and owner of Gitanjali Gems Mehul Choksi.
Official sources said the agency will approach a competent court in Mumbai with a request to obtain Letters Rogatories (LRs) to be sent to about 15-17 countries where the central investigation agency has traced the footsteps of the diamond and gold jewellery businesses of the firms owned by Modi, his uncle Choksi and others associated with them.
The countries where the LRs would be sent include Belgium, Hong Kong, Switzerland, the United States, the United Kingdom, Dubai, Singapore and South Africa.
Some official requests on the basis of agency-to-agency exchange will also be sent to few countries, the sources said.
Lawyer Says He Will Advise Nirav Modi Not To Return To India For Investigation
Nirav Modi’s lawyer Vijay Aggarwal seems confident the case against his client, accused in a fraud worth over Rs 11,000 crore, would not stand in a court of law for “even five minutes”.
Punjab National Bank’s claim that there were no records of letters of undertakings extended to Modi’s firms could be easily refuted, Aggarwal told BloombergQuint in an interview.
To say it is not in the books of the bank is an incorrect statement, absurd, which is not going to stand for even five minutes in the court of law.Vijay Aggarwal, Nirav Modi’s Lawyer
CBI Questions PNB's Executive Director for Second Day
The CBI has examined Punjab National Bank's Executive Director KV Brahmaji Rao for the second day today in connection with the Rs 11,400 crore PNB scam allegedly involving jewellers Nirav Modi and his uncle Mehul Choksi, officials said.
Rao, who started his career in banking 35 years ago as a probationary officer in Vijaya Bank, handled the Mumbai zone, among others, in the bank where the crime was allegedly detected, they said.
The officials said several other officers of the bank were being questioned by the agency as well.
Banks Plan Raising Cover Against Fraud
Rattled by a spate of frauds in the banking sector, lenders are now planning to increase insurance cover against delinquencies by their employees to protect their bottomlines.
Frauds of such magnitude and scale -- PNB fraud Rs 11,400 crore and OBC fraud Rs 390 crore -- has forced us to consider substantially much higher risk cover than the basic banker’s indemnity policy which various banks have right now.Public Sector Bank official
Punjab National Bank had only bought a basic banker's indemnity policy, which covers employee fraud, to the extent of Rs 2 crore which would not cover even 0.2 per cent of Rs 11,300 crore fraud done allegedly by Nirav Modi, Mehul Choksi and his associates in connivance with officials of a Mumbai branch.
Soon after this, a case of alleged swindling of Rs 390 crore from Oriental Bank of Commerce (OBC) was registered against a Delhi-based diamond jewellery exporter. In between there was a fraud case of Rs 3,695 crore by Rotomac Pen company owner Vikram Kothari in which the CBI filed cases and effected several arrests.
With faith on their own internal audit system and risk management, banks were not keen for higher cover but a series of frauds in the system have compelled them and in the recent Indian Banks' Association meeting also the issue came up for the deliberation, the official of another public sector lender said.
However, the official said, cover can be for fraud not for the wilful default where number of lenders are involved and these two have to be dealt separately.
In the Winsome Diamond Group’s case, the company took a loan of Rs 6,800 crore from a consortium of banks, including PNB. However, Nirav Modi primarily cheated PNB by getting fake LoUs made in connivance with various bank officials.
Besides, there is allegation of forgery and unauthorised use of global payment network SWIFT for unauthorised issuance of credit instrument (LoU) while lenders issued standby letters of credit in favour of international bullion banks to supply gold to Winsome Group companies.
Out of Rs 6,800 crore outstanding, Winsome’s associate Forever Precious Diamonds and Jewellery owes another Rs 2,121.82 crore to a set of banks led by PNB.
At the same time, Winsome so far is seen and tried at various courts of law as case of commercial default by an old customer Haytham and due to cross-default clause in standby letters of credit (SBLC) resulting in cumulative large default on banks.
Recently, the Sharjah Federal Courts have passed decrees in favour of Winsome Diamond and its associate Forever and against the overseas customers controlled by Jordanian national Al Haytham in the suits for recovery of money.
The court process involved institution of an experts' committee which concluded that the transactions were genuine and money is owed by Haytham companies to Winsome. The order also attributed the cause of Haytham default to his losing money in derivatives trading.
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01:06 PM, 19 FebThe Nirav Modi Scam
01:12 PM, 19 FebGitanjali CFO Steps Down
01:38 PM, 19 Feb"Where is the Country's Custodian", Questions Rahul Gandhi
09:42 PM, 19 FebThree PNB Brady House Officials Arrested, CBI Searches Residences
07:41 AM, 20 FebNirav Modi Allegedly Pens Letter to PNB Over Scam
11:47 AM, 20 FebPNB Ratings Under Review: Moody's
06:22 PM, 20 Feb'Nirav Modi's Davos Photo Proves Nothing': Amit Shah
07:18 PM, 20 Feb'Incumbent Upon State to Chase Those Who Cheat Banking System': Arun Jaitley
08:10 AM, 21 Feb'Can't Pay You, Look For Other Jobs': Nirav Modi to Employees
10:46 PM, 20 FebNirav Modi's Lawyer Asks Why Would His Client Run Away
12:17 PM, 21 Feb'Look Forward to Your Sermon': Rahul Gandhi
09:02 PM, 20 FebCBI Arrests 5 in PNB Fraud Case, Including Firestar CFO Vipul Ambani
02:16 AM, 21 FebGovt Must Get a Free Hand to Probe PNB Fraud: SC
10:38 AM, 22 FebED Seizes 9 Luxury Cars Belonging to Nirav Modi
07:38 PM, 22 FebCome up With Implementable Plan to Repay Dues: PNB Tells Nirav Modi
07:38 PM, 22 FebEnough Assets to Meet Any Liability: PNB
08:27 PM, 22 FebMEA Statement on Two Questions By Journalists on Nirav Modi
09:41 PM, 22 FebNirav Modi Fails to Keep ED Date; Agency Issues Fresh Summons
09:41 PM, 22 FebPNB Has Transferred 1,415 Employees Since 19 February
01:23 AM, 22 FebShow-Cause Notices Issued to Auditors of PNB & Gitanjali Gems
10:48 AM, 23 FebFinance Ministry Puts Checks in Place
10:11 PM, 23 FebModi Breaks His Silence on PNB Fraud, Promises 'Strict Action'
01:36 PM, 24 Feb'In the Indian System, Politicians are Accountable But Regulators Are Not': FM
03:13 PM, 24 Feb'Have No Idea Where He is': Mehul Choksi's Lawyer on His Whereabouts
04:57 PM, 24 FebPassports of Nirav Modi and Mehul Choksi Revoked