State-run Punjab National Bank (PNB) said it has unearthed fraudulent transactions of around Rs 11,400 crore in one of its branches in Mumbai and filed a complaint with the Central Bureau of Investigation (CBI)Central Bureau of Investigation (CBI) on the fraud amid concern that the contagion could spread to other banks.
According to two people familiar with the matter, who asked not to be identified, the case pertains to jeweler Nirav Modi, who is already being investigated by the federal investigation agency in connection with an earlier complaint by the same bank. The complaint was about fraudulent transactions of Rs 280 crore, although the bank said at the time that it was checking if the magnitude of the swindle was more.
Official sources said the agency filed the case under the Prevention of Money Laundering Act (PMLA) after going through a CBI FIR filed early this month.
It is understood that the Enforcement Directorate (ED) also went through the PNB complaint that was made out against Modi and others.
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The agency, they said, would probe if the allegedly defrauded bank funds were laundered and these proceeds of crime were subsequently used by the accused to create illegal assets and black money.
The CBI had booked diamond merchant Nirav Modi, his brother, wife and a business paCentral Brtner for allegedly cheating PNB of over Rs 280.70 crore in 2017.
It had also raided the residence of Modi, his brother Nishal, wife Ami and Mehul Chinubhai Choksi, all partners of Diamond R US, Solar Exports and Stellar Diamonds and two bank officials — Gokulnath Shetty (now retired) and Manoj Kharat, who was also named in the FIR as accused.
Modi (46), who had figured in the Forbes’ list of richest Indians, has been booked by the CBI for cheating after PNB sent a complaint to it alleging that the jewellery firm owner, his brother, wife, and Choksi entered into a criminal conspiracy with the officials of the bank and cheated it, causing a “wrongful loss”.
“The public servants committed an abuse of official position to cause pecuniary advantage to Diamond R US, Solar Exports, Stellar Diamonds and a wrongful loss of Rs 280.70 crore to Punjab National Bank during 2017,” the CBI FIR has alleged.
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The bank had also alleged in the complaint that a fraudulent issuance of Letters of Undertakings (LOU) took place on January 16, 2018, for and on behalf of the accused firms, which approached the bank and presented a set of import documents to the branch with a request to allow buyers’ credit for making payment to overseas suppliers.
The CBI also received two complaints from PNB against Modi and a jewelry company alleging fraudulent transactions worth about Rs 11,400 crore. The bank had also intimated stock exchange BSE about the “fraudulent and unauthorized” transactions worth over USD 1771.69 million in one of its branches in Mumbai.
The chief executive of a state-owned bank said on condition of anonymity that Modi had written to bankers offering to repay all his dues to them by selling his flagship company Firestar Diamond, which is valued at Rs 6,435 crore, in the next three to six months.
PNB’s shares fell 10% on Wednesday.
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