With the billionaire diamond jeweller Nirav Modi and his kin at the centre of the scam, the Punjab National Bank (PNB) fraud case of Rs. 11,400 crores is touted as the biggest ever fraud in the Indian banking sectors. Modi’s wife Ami, brother Nishal and maternal uncle Mehul Chinubhai Choksi are also a part of the fraud. They further are partners in Diamonds R US, Solar Exports and Stellar Diamonds. These diamond firms have branches in foreign locations such as Hong Kong, Dubai and New York.
It is said PNB played its part by suspending 10 of its officials and referred the case to the Central Bureau of Investigation (CBI) and Enforcement Directorate (ED.) PNB further revealed the name of an employee involved in the fraud. Gokulnath Shetty, the Deputy Manager posted at PNB’s foreign exchange department in Mumbai.
Last week, PNB lodged a First Information Report (FIR) with the CBI stating fraudulent Letter of Undertakings (LoUs) worth Rs. 280.7 crore was first issued on the 16th of January 2018. In the complaint, PNB named three diamond firms Diamonds R US, Solar Exports and Stellar Diamonds. These firms first approached PNB on the 16th of January with a request for buyers’ credits to make payments to suppliers overseas. Shetty along with another official Manoj Kharat fraudulently issued LoUs without following the procedures. He further did not enter the data in the banking system to avoid detection of transactions.
A LoU is a letter of comfort issued by a bank to other banks; based on which foreign branches offer credit to buyers. LoUs are mostly used for availing credit at Hong Kong based branches of a few Indian banks.
Modi will face a fresh CBI probe as the agency is looking at a suitable legal action to be taken in the case. He is currently being investigated by the CBI for cheating and fraud involving Rs. 280 crores at the PNB Mumbai branch.
A Senior Official of a public sector bank said three other jewellers Gitanjali, Ginni and Nakshatra are currently under the scanner. The CBI and ED are looking at their arrangements with various banks and the end use of money.
