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PNB fraud: Issuing of LoUs going on since 2008, CBI tells court

According to the remand report filed by the CBI, Tiwari was working as chief manager in Forex Department and was incharge during the period from 2015 to 2017

Press Trust of India  |  Mumbai 

Income Tax,enforcement directorate, ED,Gitanjali groups,SEZ, income tax act, Mehul Choksi,Punjab national bank, PNB, Enforcement Directorate (ED), Prevention of Money Laundering Act (PMLA), diamond merchant nirav modi, jewellery designer nirav modi,
Security guards stand inside Nirav Modi showroom in New Delhi (Photo: Reuters)

A special court here today remanded in police custody till March 3 three officials of Punjab National Bank, arrested yesterday in connection with alleged fraud of Rs 11,384 crore, while observing that there is a possibility of their involvement in diverting the money.

During the arguments over the custody of the trio, the told the court that key accused Gokulnath Shetty, then deputy (now retired) of PNB, had told them that issuing of the Letter of Undertakings (LoUs) had been going on since 2008.

PNB had earlier said that group companies of alleged mastermind and diamond and his relative Mehul Chokshi's in collusion with two of their officials from its Brady House Mumbai branch, were fraudulently receiving LoUs during 2011 to 2017.

The three PNB officials--Bechhu Tiwari, the then in the Forex department of PNB, Yashwant Joshi, Scale II in the Forex department, and Praful Sawant, handling the exports section--were produced before the special court S R Tamboli by the today.

"Tiwari, Joshi and Sawant are remanded in police custody till March 3," the said.

"The offence needs to be investigated and there is a possibility of involvement of officers in diverting money. The has to confront the accused with various documents," the said.

According to the remand report filed by the CBI, Tiwari was working as in Forex Department and was incharge during the period from 2015 to 2017, but he did not monitor the fraudulent and illegal LoUs which were being issued by Shetty.

The agency said Tiwari issued circulars in February 2016 and February 2017 for keeping a check on LoUs sent through of the bank, but neither did he take any follow-up nor initiated any steps to see why his instructions were not being followed by Shetty, Joshi and Sawant.

"His deliberate acts of omission led to the continuance of concealment and largescale liabilities of PNB to foreign banks," the agency said.

The CBI said Joshi deliberately did not submit daily reports between the year 2015 and 2018 in respect of SWIFT messages and aided and abetted in the conspiracy to cheat PNB to the tune of hundreds of crores.

"Even after having circulars for keeping a check on LOUs sent through of the and whether the same were not entered in the Core Banking Solutions (CBS), Joshi, in conspiracy with others, deliberately ignored the instructions to avoid detection of the transactions," the CBI said.

On Sawant's role, the agency said he deliberately didn't check the details of SWIFT messages sent daily and whether the same were entered in the of PNB.

The agency also said that the accused persons are not co-operating in the investigation and are shifting the entire responsibility on Shetty in the fraud and avoiding their responsibility in monitoring the transactions in SWIFT in spite of instructions.

During the arguments, the said that Shetty told the CBI that such transactions of issuing LoUs were going on since 2008.

Arguing for the accused trio, their told the court that Shetty was the perpetrator of the crime who left no trace through which the or the manager could know about the irregularities.

After Shetty retired in May 2017, Joshi took over and he reported about this scam to the bank which was later brought to the notice of the CBI, he said.

"The person who was instrumental in bringing out the case has been arrested," the said.

The CBI last Saturday arrested Shetty, Manoj Kharat, a single of PNB, and Hemant Bhat, authorised signatory of

On January 31, the CBI registered an FIR against diamantaire Modi, his companies and uncle

The FIR has listed eight fraudulent transactions worth over Rs 280 crore but based on further complaints from the bank the CBI now says the amount investigated in the first FIR is over Rs 6,498 crore, involving 150 LoUs allegedly fraudulently issued by Shetty and Kharat.

The remaining 150 fraudulent LoUs worth over Rs 4,886 crore issued for Gitanjali group of companies are part of the second FIR registered yesterday by the agency against Choksi and his companies Gitanjali Gems, Nakshatra Brands and Gili.

All these LoUs were issued or renewed during 2017-18, the officials had said.

First Published: Tue, February 20 2018. 22:35 IST