PNB scam: Violation of norms going on since 2010, says CBI

Violation of norms for issuance of Letters of Undertaking (LoUs) to benefit billionaire jeweller Nirav Modi and his uncle Mehul Choksi had been going on since 2010, the CBI told a court on Monday.

The agency, which secured a 12-day remand of four accused arrested on Sunday, explained the modus operandi involved in the alleged Rs 126.3 billion Punjab National Bank (PNB) fraud before the special CBI court.

An LoU would be issued to one of the firms of Modi and Choksi, and after the money was credited to the applicants' account, a new LoU would be obtained to "adjust" the earlier one, the CBI lawyer said.

This had been going on since 2010, the lawyer said, while seeking remand of four accused including Aniyath Shiv Raman Nair, Director of Gitanjali Group of Companies of Choksi.

Nair had signed various applications to avail the LoU facility, and he was also a director at 19 other companies of Mehul Choksi, the CBI lawyer said.

Manish K Bosamiya, then Assistant General Manager (Operation) of Firestar International Pvt Ltd (a Nirav Modi group firm), who was also produced before the CBI court, was responsible for day-to-day credit activities of the company, said the lawyer of the investigating agency.

Bosamiya was the one who was liaisoning with banks, especially PNB, for credit and disbursement, the CBI lawyer told the court.

Bosamiya used to visit the Brady House branch of PNB here, the CBI lawyer said. It is from this branch that the alleged scam started.

Documents for LoUs were submitted on the instructions of Bosamiya, as per the information given by co-accused Arjun Patil (senior executive, Firestar) to the interrogators, the CBI said.

Patil told investigators that he had prepared the documents on Bosamiya's direction, the CBI lawyer claimed.

Another accused Miten Pandya, who was finance manager at Firestar and was earlier assisting Bosamiya, had taken charge of all the activities which Bosamiya was doing earlier, the CBI said.

However, Bosamiya's lawyer told the court that he had left the company three years ago and that he was assisting the CBI in its investigation. Bosamiya had visited the CBI office for assisting the probe 8 to 10 times, the lawyer added.

Bosamiya was taken into custody around 11 am on Sunday and was produced before the court around 4 pm on Monday, after over 24 hours, he said, alleging that the CBI showed wrong time of the arrest and this was an illegal custody.

Under the law, an accused has to be produced before a court within 24 hours of the arrest.

The lawyer of Sanjay Rambhia, a partner of the firm M/s Sampat and Mehta which was auditing the company since 2001, told the court that his client had pointed out unsecured loans of Rs 51 billion and also brought them to the notice of the Income Tax department.

While sending the four accused to the CBI custody, judge S R Tamboli said there were voluminous documents which needed a probe, and with which the accused were needed to confronted.

More than Rs 65 billion were involved in the offence, the judge noted.

In order to find out the nexus (between firms and PNB officials), a fair chance needs to be given to the investigating officer, the judge said, sending all four to the CBI custody till March 17.

Bosamiya, Miten Anil Pandya, Sanjay Rambhia and Aniyath Shiv Raman Nair were arrested on Sunday.

It is alleged that Choksi and Modi got LoUs and Foregin Letters of Credit (FLCs) of Rs 126.3 billion issued in favour of foreign branches of Indian banks based on fraudulent claims.

Earlier today, the CBI court remanded six others, arrested in the case last month, in judicial custody till March 19.

Vipul Ambani, President, Finance, the Firestar International; Kavita Mankikar, executive assistant and authorised signatory of three firms of Nirav Modi; Arjun Patil, senior executive, Firestar group, were arrested in the case related to the Modi group firms.

Kapil Khandelwal, CFO, Nakshatra group and Gitanjali group and Niten Shahi, manager, Gitanjali group, were arrested in the case related to Choksi's firms.

Rajesh Jindal was a senior PNB official.

All the six were produced before judge S R Tamboli after their CBI remand ended on Monday.

Mankikar's lawyer said in the court that she suffered from diabetes, while Ambani's lawyer said he suffered from stomach pain and back pain. The judge, while remanding them in judicial custody, said they should be provided necessary medical help.