PNB Scam: ED Officials of Bank's Whistle-Blower Claim in Closet. ED officials sceptical of bank's whistle-blower claim, warn of more skeletons in the closet. The Central Bureau of Investigation (CBI) is probing 150 Letters of Undertaking (LoUs). A bank guarantee issued by state-owned Punjab National Bank — which allowed billionaire diamond designer Nirav Modi to flee the country after allegedly perpetrating a fraud of Rs 11,000 crore.
PNB Scam: ED Officials of Bank's Whistle-Blower Claim in Closet
According to CBI officials, investigators have conducted 20 raids at various premises occupied by Nirav and his associates. They were able to recover 95 key documents linked to the PNB bank fraud. "These 95 documents are basically imported bill applications on the basis of which the LoUs are issued," a CBI official said. "The bank has filed a second and third complaint as well and has handed over some documents to us which are being examined. We have asked for some more documents related to reconciliation reports, a copy of audits to figure out as to why the huge sums did not raise red flags in the system.” The bank, in its complaint to the CBI, alleged that two employees — Gokulnath Shetty and Manoj Kharat — fraudulently issued the LoUs in violation of prescribed procedures. The bank also claimed that entries were not made in the system to avoid the detection of alleged illicit transactions.
PNB managing director Sunil Mehta said "this fraud started in 2011 and continued until 16 January 2018, when firms M/S Diamonds R US, M/S/ Solar Exports and M/S Stellar Diamonds approached the bank’s mid-corporate branch at Brady House, Mumbai, with a request to allow buyer's credit for paying overseas suppliers". “Since there was no sanctioned limit in their name of the above firms, branch officials requested the firms to furnish at least 100 percent cash margin for issuing LoUs to raise the buyer’s credit. The firms contended that they'd been availing this facility in the past, but branch records did not reveal that any such details had been granted to the said firms,” the PNB complaint alleged. "No doubt there is an operational failure on the part of the bank, but each and every transaction is recorded and every evening there is reconciliation and day-to-day records are recorded. If the money went out, then who gave the money? Who is the authority? If it was forged, then why was no verification done after the first transaction was carried out in 2011? The RBI does its own audit — apart from the internal audit — and if the money was paid, it has to reflect somewhere. If two employees can carry out such a scheme, then there is something seriously amiss about how this bank is operating," the official added. Enforcement Directorate (ED) officials watching Mehta's press conference said they were baffled when the top boss of the public sector bank claimed that the bank was both whistle-blower and victim. The sources said Gokulnath Shetty, former deputy manager of PNB, is absconding and his residential address — as per official records — has been rented out.
PNB managing director Sunil Mehta said "this fraud started in 2011 and continued until 16 January 2018, when firms M/S Diamonds R US, M/S/ Solar Exports and M/S Stellar Diamonds approached the bank’s mid-corporate branch at Brady House, Mumbai, with a request to allow buyer's credit for paying overseas suppliers". “Since there was no sanctioned limit in their name of the above firms, branch officials requested the firms to furnish at least 100 percent cash margin for issuing LoUs to raise the buyer’s credit. The firms contended that they'd been availing this facility in the past, but branch records did not reveal that any such details had been granted to the said firms,” the PNB complaint alleged. "No doubt there is an operational failure on the part of the bank, but each and every transaction is recorded and every evening there is reconciliation and day-to-day records are recorded. If the money went out, then who gave the money? Who is the authority? If it was forged, then why was no verification done after the first transaction was carried out in 2011? The RBI does its own audit — apart from the internal audit — and if the money was paid, it has to reflect somewhere. If two employees can carry out such a scheme, then there is something seriously amiss about how this bank is operating," the official added. Enforcement Directorate (ED) officials watching Mehta's press conference said they were baffled when the top boss of the public sector bank claimed that the bank was both whistle-blower and victim. The sources said Gokulnath Shetty, former deputy manager of PNB, is absconding and his residential address — as per official records — has been rented out.
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