Officials at Punjab National Bank's (PNB) Brady House branch in South Mumbai may have made close to Rs 823 crore after receiving kickbacks for issuing fraudulent LoUs to Nirav Modi's firms. A chartered accountant has shared damning details of how the PNB staffers were allegedly handed out 2 per cent hush money per annum for several years.
As per the information shared by a chartered accountant with India Today, PNB officials were charging a commission of around 2 per cent on each LoU per year which was never shown in bank's account books.
Giving a break up of how PNB officials were allegedly charging commissions, the source explained: For instance, if the LoU amount is Rs 500 crore, than 2 per cent for one year which comes at Rs 10 crore was being charged as commission.
In terms of LoUs which were issued by PNB for the last several years, the amount comes close to Rs 823 crore. For example, LoUs worth Rs 280 crore (in first complaint), Rs 4880 crore (in second complaint) and LoUs worth Rs 5000-Rs 6000 crore were given every year between 2011 and 2016-17.
What makes the PNB fraud more scandalous is the way SWIFT codes were allegedly used by unauthorised officials. A SWIFT message cannot be sent without the authorization of at least three bank officials. It's only when all three bank officials put in their codes a SWIFT message can be sent.
Manoj Kharat, who worked as single window operator (SWO) at PNB had allegedly obtained access to SWIFT password. On Saturday, Kharat was remanded to 14-day CBI custody.
The lowest-ranking official authorised to use SWIFT at PNB's Brady House branch was Gokulnath Shetty who would have one of the passwords. Apart from Shetty, there were two senior level officials who had these passwords for clearance.
It is highly unlikely that the DGM of PNB branch office may not have been aware about the alleged fraud. In addition to high level clearance, SWIFT messages for the entire year are audited by four different auditors.
A bank has different audits - statutory audit, internal audit, audits during quarterly closing, RBI audit during inspections and a concurrent audit. A concurrent audit is recommended if lapses are found in any branch.
What is surprising is that for all these years fraudulent activities were going on at PNB's Brady House branch without any auditor catching a whiff of swindling of hundreds of crores of taxpayers' money.