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Punjab National Bank fraud updates: CBI questions 17 officials, ED seizes assets worth Rs 5,716 crores

The CBI virtually took control of the entire campus of Punjab National Bank's Brady Road branch in Mumbai, which is at the centre of a clossal banking fraud involving billionaire jewellers Nirav Modi and Mehul Choksi, and started an intensive search operation, officials said on Monday

FP Staff February 19, 2018 19:24:13 IST
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Punjab National Bank fraud updates: CBI questions 17 officials, ED seizes assets worth Rs 5,716 crores

Highlights

10:16 (ist)

Meanwhile, Bipasha Basu, Kangana Ranaut accuse Gitanjali Gems of non-payment of dues, breach of contract

According to News18, the actresses have accused Mehul Choksi-owned Gitanjali Gems of non payment of dues and breach of contract. A spokesperson for Ranaut said, "There are outstandings due on Kangana’s Nakshatra endorsement, beyond the stipulated contract." She was the company's brand ambassador since 2016 and claims she has not been paid her dues fully for endorsing the jewellery brand.

On the other hand, Bipasha Basu, who endorsed Gili, accused the Gitanjali Gems group of using her photographs even after her contract expired. 

16:49 (ist)

'Checks in place, but no one cares'

Looking at PNB-like frauds, if someone thinks that there are no checks in place in the system, they are wrong. "There are checks but no one really cares," said a banker who requested anonymity. He takes the example of the LoU (Letters of Undertakings) fraud in PNB. If a branch-level official does a transaction of this manner for a period of seven years, it can get caught at different levels if any of the checks in place triggered this illegal activity.

For instance, the SWIFT messaging platform that was used by the perpetrators in the PNB case is subjected to a daily check by the branch manager, which is compulsory in any bank. Even if one imagines that this part failed, the branch manager has to do a daily tally of income and expenditure in the branch while one of the officers (not involved in the transactions) combs through the books to look for suspicious transactions, the official said.

This apart, there are RBI and government representatives on the boards of large banks who are supposed to keep an eye on all transactions and ensure that nothing goes amiss.

"But, it appears that all of them were sleeping when a fraud was developing," said the banker. That apart, given the tremendous pressure on bankers to generate business, top-level officers often turn a blind eye to illegal business activities.

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10:02 (ist)

'Payoffs, late night parties'; corruption has seeped into very core of India's public sector banks

Late night parties at plush farmhouses and hefty kickbacks to top bank officials are two 'compulsory' requirements for scamsters to access the loans from public sector banks that they fully know would turn into Non-Performing Assets (NPAs).

A Firstpost investigation into the Punjab National Bank-Nirav Modi fraud case shows that corruption has gone into the very bone and marrow of state-owned banks and this is not just a 'one-off' for several banks, including PNB and others like UCO and Canara, which have encountered exposure in the Modi-Mehul Choksi scam.

Read full report here

16:11 (ist)

ED Director to take over probe into PNB scam

ED Director Karnal Singh has reached Mumbai to take over the probe into the Punjab National Bank fraud case, reports MoneycontrolThe report adds that the Enforcement Directorate might also issue Letters of Rogatory to Hong Kong and other nations where they suspect that funds were diverted

15:55 (ist)

A timeline of how the Rs 11,400-crore scam involving Nirav Modi unfolded

Firstpost takes a look at the events that unfolded since 16 January when the Punjab National Bank first found out about the fraudulent transactions in what has now become the largest banking scam in Indian history.

15:22 (ist)

ED probes 250 shell companies linked to Nirav Modi, Mehul Choksi that may have laundered money

Enforcement Directorate (ED) sleuths are examining details of over 250 shell firms linked to Nirav Modi, his brother and Mehul Choksi, which they suspect were used to move ill-gotten financial assets after they defrauded state-owned Punjab National Bank of Rs 11,360 crore. These ghost entities, sources said, allegedly acted like a sleeper cell to launder money in India and abroad.

14:48 (ist)

Shiv Sena calls Nirav Modi a BJP 'partner', claims diamond czar helped collect funds for party

The Shiv Sena on Sunday attacked Prime Minister Narendra Modi over the multi-crore-rupee Punjab National Bank (PNB) scam and alleged that diamond czar Nirav Modi, who is at the centre of the scandal, had been a "partner" of the BJP and helped it collect funds for elections.

14:11 (ist)

Most of Nirav's Modi's LoU's were issued in 2017-18: CBI

The CBI has said that a majority of the Letters of Understanding (LoUs) in the Punjab National Bank fraud were either issued or were renewed in the bank in 2017-18, The Indian Express reported. 

The agency said that many old LoUs too were renewed in 2017. Nirav Modi and his relatives were rolling over the LoU money by getting them renewed, added the report. 

12:10 (ist)

Nirav Modi might be holding dual citizenship

Nirav Modi may be holding dual citizenship, according to The Tribune report. Modi and his brother Nishal grew up in Belgium. According to intelligence sources Nishal had surrendered his Indian passport and acquired Belgian citizenship, added the report. 

18:57 (ist)

Jewellery makers fear may slash lending to industry after Rs 11,000-cr PNB scam banks 

Jewellery traders and exporters are apprehending that "ripple effects" of the $1.8 billion fraud involving billionaire diamond trader Nirav Modi's companies could make lenders more cautious and impact credit flow to the industry to some extent, officials said here on Friday.

However, they also said that in the wake of the fraud, the entire gems and jewellery industry should not be blamed or branded as "risky" industry.

"Some ripple effects are bound to happen and it (the fraud) will have some psychological impact on the mind of loan advancers. Whenever a banker is financing someone, he will be more cautious to check out whether there is any possibility of fraud or not. This could impact credit flow to the industry or lead to delay in extending advances," Gem and Jewellery Export Promotion Council (GJEPC) Regional Chairman (Eastern Region) Prakash Chandra Pincha said.

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14:47 (ist)
 
The external affairs ministry suspended with immediate effect the passports of diamantaire Nirav Modi and his business partner Mehul Choksi for four weeks. The ministry gave them one week to respond why their passports should not be revoked.
 
"If they fail to respond within the stipulated time it will be assumed that they have no response to offer and the MEA will go ahead with the revocation," the ministry said in a statement.
 
10:37 (ist)

Nirav Modi in New York, claims report

NDTV reported that Nirav Modi is staying in a suite at the JW Marriott's Essex House in Manhattan, New York, a short walk away from his luxurious Madison Avenue jewelry retail store.

15:36 (ist)

Highlights of CBI's FIR against Nirav Modi​

The CBI FIR dated 31 January, 2018 was based on a complaint filed by Avneesh Nepalia, the Deputy General Manager at Punjab National Bank. It alleged that the partnership firms mentioned in the complaint had gained an amount of Rs 280.70 crore rupees while the bank suffered a wrongful loss of the same magnitude.

The CBI FIR itself lists out the details of the accused. The primary name is that of Nirav Modi who is listed as a partner in M/s Diamond R US, M/s Solar Exports and M/s Stellar Diamonds.

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11:15 (ist)

CBI books two persons in PNB case

A retired PNB officer and a clerk have been booked by the CBI for helping Nirav Modi, his wife and relatives, a Times of India report said. PNB's retired deputy manager Gokulnath Setty and single window operator Manoj Kharat had issued eight letters of understanding (LoU) worth over Rs 280 crore to Nirav’s company just three months before the former’s retirement, the report said.

LIVE NEWS and UPDATES

Feb 22, 2018 - 13:19 (IST)

Have followed lawful avenues available to recover dues from Nirav Modi, says PNB

Feb 22, 2018 - 13:07 (IST)

Vipul Ambani was director of 8 shell firms

Vipul Ambani, Firestar International's president (Finance), was director of eight shell companies, India Today TV reported quoting unnamed sources. It also added that Ambani is singing while in CBI custody. 

A special CBI court in Mumbai on Wednesday sent to police custody, till 5 March, five senior executives of the Nirav Modi and Mehul Choksi Group of Companies, including Vipul Ambani, who were arrested on Tuesday in conection with the Rs 11,400 crore Punjab National Bank fraud.

Feb 22, 2018 - 12:54 (IST)

How Nirav Modi's employees colluded with bank officials to create fake LoUs

 For hours on Wednesday, sleuths from the Central Bureau of Investigation (CBI) were frustrated as they were trying to find out how fake Letter of Undertakings (LoUs) and Foreign Letter of Credits (FLCs) running into thousands of crores was drafted and subsequently sanctioned by the Punjab National Bank (PNB) officials. The two executives of Nirav Modi admitted to preparing and signing the applications made to PNB but they refused to disclose details how and where such applications were finalised.

In its note, the agency has made a startling revelation that even top officials of the PNB beginning with the zonal to head office was aware of the business dealing with Nirav Modi's companies and the assertion that top officials were ignorant has been neutralised by the probe agency.

Read full article here

Feb 22, 2018 - 12:15 (IST)

Finance ministry to seek BBB's input to see if PNB top management reshuffle is possible

According to Moneycontrola finance ministry official told CNBC-TV18 that the ministry was planning to seek Banks Board Bureau's (BBB) inputs on whether a PNB top management reshuffle is possible. 

Feb 22, 2018 - 11:24 (IST)

ED seizes Nirav Modi's assets worth 94 crore

The ED on Thursday said it has frozen mutual funds and shares worth Rs 94.52 crore of the Nirav Modi and Mehul Choksi groups in connection with a money laundering probe against them in the Rs 11,400-crore alleged fraud at the Punjab National Bank (PNB).

Feb 22, 2018 - 11:05 (IST)

Nirav Modi scams shows its time Parliament reexamined banking laws

Various process failures of public sector banks in India are not new. What is new in the PNB fraud is that, for the first time, questions are being raised about the supervisory capacity and systems in Reserve Bank of India (RBI). The government has written to the RBI asking for why the scam was not detected in its systems. Concerned citizens have asked for similar information in the past and disclosures by RBI have not been adequate.

Laws which govern the functioning of RBI need to be changed to bring about transparency and accountability. This has to then be supported by scrutiny into the functioning of the institution. A tragedy is a terrible thing to waste. The legislature should take a relook at the legislative framework of transparency, accountability and governance of RBI. The Draft Indian Financial Code addresses many of these concerns and there is need to incorporate its principles in primary legislation.

Read full article here

Feb 22, 2018 - 10:45 (IST)

Visuals of Nirav Modi's cars seized by ED

Feb 22, 2018 - 10:24 (IST)

ED freezes Nirav Modi's mutual funds and shares worth Rs 7.8 crore

Feb 22, 2018 - 10:22 (IST)

ED seizes nine luxury cars of Nirav Modi including Rolls Royce, Mercedes

Feb 22, 2018 - 10:16 (IST)

Meanwhile, Bipasha Basu, Kangana Ranaut accuse Gitanjali Gems of non-payment of dues, breach of contract

According to News18, the actresses have accused Mehul Choksi-owned Gitanjali Gems of non payment of dues and breach of contract. A spokesperson for Ranaut said, "There are outstandings due on Kangana’s Nakshatra endorsement, beyond the stipulated contract." She was the company's brand ambassador since 2016 and claims she has not been paid her dues fully for endorsing the jewellery brand.

On the other hand, Bipasha Basu, who endorsed Gili, accused the Gitanjali Gems group of using her photographs even after her contract expired. 

Latest updates: According to India Today, Nirav Modi may currently be hiding in Dubai. According to the report, CBI is seeking Interpol's help to nab the absconding businessman.

Amid the banking scam, FICCI, the representative body of Indian private companies has urged privatisation of Indian public sector banks, adding that re-capitalisation of banks have not helped the sector.

Meanwhile, the Central Vigilance Commission has express dissatisfaction over the PNB report over lapses and has asked the vigilance officer of the bank to re-investigate the case.

As the Punjab National Bank scam unfolds across the country, a former aide of Mehul Choksi, the owner of Gitanjali Gems, has hit out at him for running the company like a 'dictator'. Srivastava said that Choksi has a lot of things to answer for cheating the public of India, adding that the businessman had threatened him with dire consequences if he went public with the irregularities.

The CBI virtually took control of the entire campus of Punjab National Bank's Brady Road branch in Mumbai, which is at the centre of a colossal banking fraud involving billionaire jewellers Nirav Modi and Mehul Choksi, and started an intensive search operation, officials said on Sunday.

The search operation is likely to continue until Monday morning, they said. The agency also started questioning of five more officials, including general manager level officers, taking the total number of those being quizzed to 11, they said.

The agency is continuing the questioning of arrested bank officials — Gokulnath Shetty (retired) and Manoj Kharat, and the signatory of Nirav Modi company's — besides that of other officials of PNB, to find out the money trail and depth of the alleged scam involving thousands of documents and digital records.

The CBI is also examining financial transactions of 18 India-based subsidiaries of the Gitanjali group of companies promoted by Choksi to understand the money trail of funds taken from various banks on the basis of Rs 11,384 crore of guarantees furnished by Punjab National Bank, the officials said.

They said the agency is also analysing records recovered from a huge server seized during searches after registration of an FIR against Choksi.

Asked about possible quid pro quo involved in the alleged scam perpetrated in collusion with billionaire diamond merchants Choksi, his nephew Modi and PNB officials, they said they are still looking into it and it cannot be clearly said if there were regular payments or not.

"Right now the focus is to understand the depth of the scam, movement of funds and role of other senior officials," an official said.

Punjab National Bank fraud updates CBI questions 17 officials ED seizes assets worth Rs 5716 crores

File image of Nirav Modi. News18

The scam surfaced when companies of Modi and Choksi approached PNB's Brady Road branch, Mumbai, in January this year seeking Letter of Understanding (LoU) for payments to suppliers. The official handling the case sought 100 percent cash guarantee before any such letter could be issued to which the company officials said no such guarantee was sought in the past.

The official checked the records which did not show such an LoU to Modi or Choksi's company which led to suspicion. It is alleged that Shetty, for the last seven years, was bypassing PNB's core banking system and issuing LoUs fraudulently.

An LoU is a guarantee which is given by an issuing bank to Indian banks having branches abroad to grant a short-term credit to the applicant. In case of default, the bank issuing the LoU has to pay the liability to credit giving bank along with accruing interest.

Shetty and Kharat allegedly sent messages of these LoUs using an international messaging system for banking systems called SWIFT (Society for Worldwide Interbank Financial Telecommunication) which is used to pass instructions among banks globally to transfer funds.

It is estimated that millions of messages are sent daily using the SWIFT technology globally wherein every member bank can send or receive messages of financial transactions to another bank worldwide.

The PNB officials allegedly sent these messages to Indian banks — Canara Bank, State Bank of India, Bank of India, Axis Bank, Allahabad bank — located in Antwerp, Hong Kong, Bahrain, Mauritius, Frankfurt without making entries in the banking software about the LoUs.

These LoUs and Letters of Credits (LC) worth Rs 11,384 crore were getting renewed or issued afresh during last six years without coming in the notice of the bank.

The Indian banks abroad did not mind as their money was safe (under guarantee from PNB) and increasing because of the accruing interest.

The party was spoiled in January this year when first renewal arose after the retirement of Shetty, the officials said.

An alarmed bank dug out all such LoUs and LCs showing a mammoth liability towards other banks.

The conniving officer also issued Foreign Letters of Credit by entering a smaller amount in trade finance module of Core Banking Solutions (CBS) system and generating the reference number and a SWIFT message was sent for the amount, the bank alleged.

It said subsequently without making any changes in the module of the CBS, the conniving officer sent modified SWIFT messages for an enhanced amount under the same reference to the beneficiary bank.

Upon receiving messages from PNB under SWIFT, the banks abroad transferred these amounts into PNB's NOSTRO account with them. A Nostro account means is an account that a bank holds in a foreign currency in another bank to enable foreign trade by its clients.

Updated Date:

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