The CBI on Monday evening arrested three senior officers of PNB for their alleged involvement in the Rs 11,400 crore fraud pertaining to Nirav Modi and his uncle Mehul Choksi. The three have been identified as Becchu Tiwari, Chief Manager, Forex who was direct supervisor of earlier arrested accused DY Manager Gokulnath Shetty and had full knowledge of the fraud happening at PNB's Brady House branch in Mumbai.
The second accused is Yashwant Joshi alias Abhay joshi who is a scale-II manager and was responsible of updating the SWIFT and CBS at the bank and took no action against Shetty while the third arrested accused has been identified as Prafull Sawant, a scale-I officer who was allegedly hand in gloves with Shetty and was responsible for checking SWIFT messages and preparing reports. As of now a total of six accused have been arrested in the case and many more arrests are likely to happen.
The primary investigation by CBI and ED is going on to find out the actual amount lost by banks in the alleged fraud committed by Modi and Choksi. Investigation reveals that Modi and Choksi took LOUs further to fund the LOUs he had taken since 2011 and the trail now goes upto seven years back when it all started. As of now the case has been registered against the LOUs taken in 2017 which are around 151, of which the last one was issued on May 2 last year. The total LOUs amounts to Rs 3,312 crores in 2017. Sources from PNB said that all these LOUs are unpaid LOUs.
The LOUs issued were to Allahabad Bank's Hong Kong branch, Axis Bank's Hong Kong branch, SBI's Mauritius and Frankfurt branches, BOIs Antwerp branch and Canara Bank's Bahrain branch. PNB has already received claims from Allahabad Bank and Axis Bank's Hong Kong branch and is also expecting claims from the remaining banks mentioned above as and when LOUs expires. While the PNB had earlier refused to pay Allahabad Bank and Axis Bank for the LoUs, the RBI had said the fraud is a case of operational risk arising on account of delinquent behaviour of one or more employees.
ED and CBI and further digging into the PNB's audit reports and have found that auditors, concurrent audits by the bank failed to detect the scam as the LOUs were never mentioned into the bank's Core Banking system CBS.
"When the CBS doesn't have any record, it won't appear in the annual balance sheets and this is the reason the fraud went on for so long without being detected, " said Former Central Statutory Auditor for PNB, BM Agarwal from Borkar and Muzumdar Associates. Sources also told India Today that CBI questioned PNB officials on why no one could notice transactions in bank's Nostro account but bank has told CBI that system only checks if the debit and credit transactions match or not, system does not check how these transactions have matched. System is alerted only if there is any outstanding in the Nostro account.
As of now CBI has questioned around 13 officials from PNB of which one is General Manager Rajesh Jindal who was in-charge at the Brady House branch of the PNB in 2011.
Both the agencies suspect that the amount that has been defrauded could be much more than what has come to light presently. A total of 500 LOUS were issued for the accused duo from PNBs Brady House branch and efforts are being taken to trace the first beneficiaries of the LOUs issued for Modi and Choksi.
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