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PNB scam: Fraud by Nirav Modi, Choksi widens to $2 bn; top 10 developments

The ED has summoned Punjab National Bank Managing Director & CEO Sunil Mehta in connection with the banking scam

BS Web Team  |  New Delhi 

Nirav Modi
The key accused in the alleged scam -- Nirav Modi (pictured), his wife Ami, and his uncle Mehuk Choksi -- on Monday skipped their scheduled appearance before the Enforcement Directorate in Mumbai. File photo

The massive (PNB) fraud just got bigger, with the scam-hit lender saying that the fraud allegedly perpetrated by absconding businessman and his uncle may be worth around $2 billion, over $204 million more than the previous estimate. Meanwhile, the key accused in the alleged scam -- Modi, his wife Ami, and Choksi -- on Monday skipped their scheduled appearance before the Enforcement Directorate (ED) in Mumbai.

The ED will also be looking for information about Modi and Choksi's assets in six foreign countries. The hunt for their foreign assets is set to expand. Further, the ED has summoned Managing Director & CEO Sunil Mehta in connection with the banking scam.

Faced with mounting pressure from the political Opposition, the Narendra Modi-led central government is also considering fast-tracking the draft fugitive economic offenders Bill.

The Central Bureau of Investigation on Monday said it questioned PNB Executive Director K V Brahmaji Rao, two general managers, and a retired official in connection with its probe into the multi-billion fraud.

Here are the top 10 developments regarding the massive banking scam that has hit PNB:

1) FinMin sets 15-day deadline for banks:
According to news agencies, Department of Financial Services Secretary Rajiv Kumar said there was a 15-day deadline for PSBs to take pre-emptive action and identify gaps to gear up for rising operational and technological risks. In this time, PSBs would have to learn from best practices and pinpoint strategies, including technological solutions. Further, PSBs would have time to clear the accountability of senior functionaries within this deadline.


2) PNB says scam may cost bank Rs 13 bn more: Scam-hit PNB on Monday said that the amount of fraudulent transactions could be Rs 13 billion (Rs 1,300 crore) more than the current estimate of about Rs 114 billion (Rs 11,400 crore).

In a filing to the BSE late on Monday night, the bank said the amount of unauthorised transactions could go up by more than Rs 13 billion (Rs 1,300 crore).

3) Key papers seized by CBI: "Crucial documents" related to the case have been seized by CBI from the premises of Mumbai-based law firm Cyril Amarchand Mangaldas (CAM). A CBI official confirmed this, saying that the agency had conducted a search operation at the law firm last week in connection with the fraud.

The agency, however, clarified that it was not examining the law firm. "The law firm was in possession of some crucial documents, which are highly relevant for our investigation," said the official cited above. "Though the law firm is not officially Nirav Modi's legal advisor, we have found some links indicating that CAM was given some mandate, which was called off when the scam broke out," said the official.

ALSO READ: PNB tightens staff transfer policy to ensure irregularities do not recur

4) Bill to seize assets of defaulters fleeing India fast-tracked: In bad news for absconders like Nirav Modi, the Modi government is considering fast-tracking the draft fugitive economic offenders Bill. The draft law might soon be placed before the Cabinet before being tabled in Parliament. Further, the draft Bill has the law ministry's approval.

ALSO READ: PNB scam: Govt fast-tracks bill to seize assets of defaulters fleeing India

It will allow the government to confiscate properties of economic offenders and defaulters who flee India. At present, confiscation can be done through multiple laws; however, it is a complicated process. More importantly, existing cases could come under the proposed law. This means that cases related to Nirav Modi, Mehul Choski, and Vijay Mallya will also be covered.

ALSO READ: PNB hits 20-month low on discovery of additional unauthorized transactions

5) Modi & co skip ED summons: Absconding diamond merchant Modi, his wife Ami, and his uncle Choksi on Monday skipped their scheduled appearance before the Enforcement Directorate (ED) in Mumbai.

If the ED does not issue fresh summons, then it is understood that the probe agency will move a special court in Mumbai seeking non-bailable arrest warrants against them.

6) ED hunts for Modi & Choksi's assets in 6 foreign countries: On Monday, the ED obtained the court's nod to issue six Letters Rogatories (LRs), which are judicial requests for obtaining information from overseas locations, pertaining to its probe against Nirav Modi. Further, the agency is expected to obtain additional LRs in this case.

The LRs issued on Monday will be sent to Hong Kong, the US, the UK, the UAE, South Africa, and Singapore.

These judicial requests are aimed at obtaining the details of Modi and Choksi's overseas financial holdings, their bank accounts, assets, partnerships, showrooms, trusts, and other assets, the officials said.

ALSO READ: Message from market to PNB, other PSBs: Bring in new credible leadership

7) ED summons PNB MD: On Monday, the ED summoned Punjab National Bank's Managing Director and CEO Sunil Mehta in connection with with the Nirav Modi scam, officials said.

The ED also examined PNB's Executive Director K V Brahmaji Rao to understand how the alleged fraud was detected and other banking procedures. Mehta, officials said, will be asked similar questions when he meets ED officials this week.

8) CBI quizzes PNB officials: On Monday, the CBI said it questioned PNB Executive Director K V Brahmaji Rao, two general managers, and a retired official in connection with the massive bank fraud involving Nirav Modi.

Meanwhile, the Income Tax (I-T) Department also said that it had attached 66 more bank accounts related to Choksi. "After Friday, 66 more bank accounts of the group have been attached with a total credit balance of Rs 800.70 million (Rs 80.07 crore)," an IT Department official told news agencies.

A CBI official said the agency questioned Rao for the third consecutive day at its Mumbai branch. On Sunday, too, Rao was questioned for over eight hours. He was quizzed along with PNB Managing Director-cum-CEO Sunil Mehta on Saturday.

The others quizzed were three general manager-rank officials of the PNB treasury division and international banking division, including a retired official.

ALSO READ: PNB fraud: Asset-backed securities not affected by scam, says Fitch Ratings

9) CBI issues lookout circulars: The CBI on Monday issued a lookout circular (LOC) against more than 10 executives of Nirav Modi and Mehul Choksi's firms.

10) CBI seeks details of nostro transactions from 5 banks: Details of financial transactions, which were conducted on the basis of 293 fraudulent Letters of Undertaking (LoUs) issued by PNB staffers to jewellers Nirav Modi and Mehul Choksi, in the nostro accounts of the scam-hit bank have been sought by the CBI from the chief vigilance officers of five banks, officials said on Monday.


With agency inputs

First Published: Tue, February 27 2018. 14:17 IST
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