The PNB scam has led to a massive overhaul in the nation’s financial system and we seem to catch fancy with every piece of information in the media related to the fraud, that we find luring us into a spurious black hole. We just can’t have enough of the shenanigans of this billion dollar embezzlement that has rattled our wits.
In a series of arrests made by CBI on Tuesday, five senior executives employed in the companies of billionaire Nirav Modi and his uncle Mehul Choksi were arrested.
Among these big wigs were-Vipul Ambani, President Finance of Firestar International, Kapil Khandelwal, Chief Financial Officer of Nakshatra and Gitanjali group (owned by Mehul), Kavita Mankikar, authorised signatory of Firestar, arrested in the Rs 11,300 crore PNB swindle case.CBI even raided a palatial mansion in Alibaug owned by Nirav Modi.
Meanwhile, Finance Minister Arun Jaitley also broke his silence and launched an onslaught at the public banking system for not safeguarding the taxpayer’s money, adding that the government will bring the perpetrators to book.
So far, the Enforcement Directorate (ED) watchdogs have ransacked over 200 premises of Modi as well as Gitanjali Gems and seized diamonds, gold and precious stones worth Rs 56.74 billion based on the book value. The income tax (I-T) department had seized 103 bank accounts and 40 properties of the Modi group of firms, but the value of this attachment is not available.
While the centre and the opposition parties at logger heads over this mega scam, each one is blaming the other for their inability to take stringent steps against the accused and piling up of loan debts in the PNB as well as the overseas branches.
What really defies our imagination is how come a colossal theft involving a staggering amount of Rs 11,300 crore was thrust upon our banking system for such a long duration since 2011 to 2017 and no one noticed. And all these happened right under the nose of two governments who reportedly just added fuel to the fire instead of checking the loopholes in the core banking system.
After so much of hue and cry it’s now that the government is finally vigilant on every move of the investigative agencies.
Sources in the Punjab National Bank have suggested that the 114 billion scam could have been averted had the overseas branches of the local branches raised an alarm.
In its complaint dated February 13th against Mehul Choksi group of companies, based on which the CBI filed a charge sheet, the PNB stated that the LoUs (Letters of understanding) issued by its officials to the overseas branches of domestic banks were in clear violation with the Reserve Bank of India norms, but were completely ignored.
Even though the RBI allows credit for import of semi-precious and precious stones it’s credit line lasts for 90 days only, but in this case the credit in some of the transactions exceeded to as long as 365 days, flouting the rules of the RBI.
But unfortunately, none of these overseas banks posed any objection to extending buyers credit violating RBI norms and continued to provide funding against fraudulent LoUs, the PNB wrote in its complaint filed to CBI’s joint Director in February 13th.
However, the RBI said on Tuesday that it had warned the banks repeatedly since 2016 on the possible exploitation of the SWIFT messaging platform in the Rs 11300 crore fraud and advised them to take preventive measures to avoid such scams.
As per the probe led by the investigative agencies, at this juncture, it’s still difficult to estimate if the gross amount of the fraud incurred is limited to Rs 11,300 crore or is higher.
PNB officials put the burden of on this colossal scam on the absence of a reliable CBS (Core Banking System), a centralized software that keeps a track of all the bank transactions and financial records and can raise an alert in case of any discrepancies.
According to earlier investigations conducted by the I-T department and the Directorate of Revenue Intelligence (DRI), discrepancies in stock value of Modi’s companies were found in 2016 and 2017. The difference in stock valuation of SEZ was to the tune of Rs 12.16 billion in 2016-17, which represents the unaccounted sale of imported diamonds diverted to the domestic market.
Meanwhile in a letter to the PNB management Nirav Modi has questioned the nebulous calibrations of the bank accounts claiming the money it owes to the bank is pegged at Rs 5000 crore, far less than the current figure of Rs 11,300 crore, ruling out any possibility of reimbursements.
In a shocking revelation to one of the latest course of developments in PNB fraud case, Nirav Modi’s counsel Vikram Agrawal came out in defence of Modi stating the cases filed by the CBI and the ED against his client would “collapse” like those related to the 2G scam, Bofors and Aarushi.
He said that the agencies are “just making noise” contending that his client was not “guilty of any wrong doing.” He said that the diamantaire did not flee the nation but was out to handle his “global operations.”
He also asserted that the PNB cannot “claim ignorance” of the funds remitted to the foreign accounts of banks based on LoUs and FLCs (Foreign Letters of Credit) as the overseas banks send the payment to the Nostro account of PNB and it was PNB who paid the customers, hence it was held responsible.
The Supreme Court has also agreed to hear a plea seeking independent inquiry into the burgeoning scam, under a bench led by CJI Dipak Mishra.