PNB fraud case: Bank which allowed Rs 11,400 cr to be siphoned off won two Vigilance Excellence Awards in last four years

Even as more and more skeletons continue to fall out of the Punjab National Bank's (PNB) cupboard, involving bank officials, in the defaulting of Rs 11,400 crore loans by billionaire jeweller Nirav Modi and his uncle Mehul Choksi, it is interesting to note that the public sector bank won several Vigilance Excellence Awards from the Institute of Public Enterprise.

According to PNB's official website, the bank won the Corporate Vigilance Excellence Award in March 2015 for "remarkable achievements of the Bank in Vigilance Administration". The bank claims it won the award for the second time in succession.

For the year 2016-17, PNB received another Vigilance Excellence Award for "Timely Completion of Disciplinary proceedings", according to Press Information Bureau

A vigilance case is defined as any complaint about "corruption, malpractice or misconduct on the part of public servants" as per the Central Vigilance Commission (CVC) manual.

Punjab National Bank. AFP.

Punjab National Bank. AFP.

It is quite ironic considering the spate of corruption charges being levelled against the bank officials. Following that, PNB suspended 18 bank officials whom it found responsible for supervisory lapses, according to this Firstpost report.

On Saturday, the Central Bureau of Investigation (CBI) arrested PNB's retired deputy manager, Gokulnath Shetty and two others in a multi-crore bank fraud case.

"The CBI has Shetty, Single Window Operator Manoj Kharat and authorised signatory of the Nirav Modi Group of Firms, Hemant Bhat," an official of the investigative agency told IANS.

The court remanded the three to CBI custody till 3 March on Saturday. The remand application said: "It is revealed that Shetty, in conspiracy with Kharat, fraudulently issued LOUs (Letters of Undertaking) without sanction and without having the powers to do so and thereby abused his official position as a public servant."

All LoUs were issued or renewed during 2017-18, the officials said.

Preliminary investigation revealed that Shetty, in connivance with accused companies, had issued fraudulent SWIFT messages without any authority, which were not entered in the trade finance module of the CBS (Core Banking System) to avoid detection, the central agency said.

Kharat was Shetty's subordinate and acted upon his directions in making and verifying SWIFT messages before Shetty authorised and transmitted them during 2017, the CBI told the court.

The FIR has listed eight fraudulent transactions worth over Rs 280 crore, but based on further complaints from the bank, the CBI now says the amount investigated in the first FIR is over Rs 6,498 crore, involving 150 Letters of Understanding allegedly fraudulently issued by Shetty and Kharat.

The remaining 150 fraudulent LOUs worth over Rs 4,886 crore issued for Gitanjali group of companies are part of the second FIR registered yesterday by the agency against Choksi and his companies Gitanjali Gems, Nakshatra Brands and Gili, they said.

The Enforcement Directorate (ED) on Thursday launched a nationwide raid on the offices, showrooms, and workshops of billionaire diamond trader Nirav Modi.

The multi-pronged action came a day after the PNB admitted to unearthing a fraud of Rs 11,515 crore involving Nirav Modi's companies and certain other accounts with the bank's flagship branch (Brady House Branch) in Mumbai and its second largest lending window in India.

The fraud, which includes money-laundering among others, concerns the Firestar Diamonds group in which the CBI last week booked Modi, his wife Ami, brother Nishal Modi and their uncle Mehul Choksi.

With inputs from agencies

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Updated Date: Feb 18, 2018 11:56:11 IST

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