PNB Rs. 11,300 crore fraud has allegedly been perpetrated by PNB staffers Gokulnath Shetty and Manoj Kharat. They are suspected of steering fraudulent loans to companies linked to billionaire jeweller Nirav Modi and entities tied to jewellery retailer Gitanjali, which is led by Modi’s uncle, Mehul Choksi.
When the banking sector is busy counting its losses in one of the most gigantic banking frauds, the law enforcement agencies, CBI and ED, have raided properties linked to Nirav Modi and Mehul Choksi’s Gitanjali Jewels. The CBI has already arrested three persons, including the 2 PNB staffers, who have been sent to the judicial custody till March 3. The ED raided dozens of Nirav Modi’s premises and seized diamonds, gold and jewellery worth Rs. 5,670 crore. The banks that are likely to be affected include UCO Bank and State Bank of India (SBI), while Axis Bank says that it has already sold its exposure to Nirav Modi and his firms.
On January 29, a PNB official from Mumbai filed a criminal complaint with Central Bureau of Investigation (CBI) against three companies, Solar Exports, Stellar Diamonds and Diamond R US, and four people, including billionaire jeweller Nirav Modi and Mehul Choksi, the managing director of Gitanjali Gems, saying they had defrauded the bank and caused a loss of Rs. 280 crore ($43.8 million). The bank alleged two junior employees at the Mumbai branch had helped the companies and people managing them get “letters of undertaking” (LoUs) from it without having a sanctioned credit limit or maintaining funds “on margin”. The LOUs were used to obtain short-term credit from overseas branches of other Indian banks, PNB said. Based on the complaint, the Central Bureau of Investigation (CBI) registered a preliminary case against the companies and the people named on January 31 and PNB said a detailed probe was underway. On February 14, PNB said that it had discovered fraudulent and unauthorised transactions totaling Rs. 11,300 crore at the Mumbai branch. Investigators have said the latest disclosure was related to the earlier case filed.
After having already searched dozens of locations linked to Nirav Modi, the Enforcement Directorate (ED), said on Saturday it conducted additional searches at 21 locations of companies tied to Modi, seizing precious stones, metals and jewellery. Both authorities (CBI and ED) have conducted dozens of raids since PNB disclosed the fraud, targeting PNB, Modi and Choksi, with the Enforcement Directorate now having seized diamonds, gold and jewellery worth Rs. 5,670 crore. On Sunday, the ED conducted fresh searches at over 45 more locations in 15 cities across India, an official said.
Raids were also carried out on Friday by the Central Bureau of Investigation (CBI) on the offices of jewellery retailer Gitanjali, whose chief executive has been accused along with Modi of colluding with PNB employees to fraudulently obtain advances for payments to overseas suppliers.