While the mastermind of the scam, billionaire jeweller Nirav Modi, and some of his close-aides have fled the country, people of India are wondering how a man and his gang could loot Rs 11,400 crore of taxpayers’ money without the government getting any whiff of the multi-crore fraud. “This, thereby, jeopardised our ability to discharge the dues of the group to the banks”, Modi told the bank last week, according to local reports.
Advertisement
CBI said applications for such letters were made from Vipul Ambani’s South-Central Mumbai office. Columnist Vivek Kaul explains why the case could be just a sign of a far deeper problem in India’s banking system.
All of them were partners or linked with Nirav Modi’s companies, Diamon R US, Solar Exports, Stellar Diamonds, and allegedly conspired with PNB officials to cause “wrongful loss”.
In its statement it said that it “has already undertaken a supervisory assessment of control systems in PNB and will take appropriate supervisory action”.
Modi, who police say left India with his family in January before PNB filed a complaint, wrote to his employees in India saying they should look for other jobs as he would not be able to pay them after the seizure of his assets and freezing of bank accounts, local media reported on Wednesday. The Central Bureau of Investigation also sealed a luxury property of billionaire Nirav Modi in the Alibaug area near Mumbai on Wednesday over the case.
The bank has named Modi’s brother, his American wife Ami, and uncle Choksi besides some others in the FIR.
The accused includes retired PNB deputy manager Gokulnath Shetty, Single Window Operator Manoj Kharat and authorized signatory of the prime accused Nirav Modi’s group companies, Hemant Bhatt. “This takes the total number of arrests in the case to eleven, including five officials of Punjab National Bank”, said a CBI officer.
On the same day, in Mumbai, the Reserve Bank of India announced its decision to set up a committee to examine the reasons for rising banking frauds and propose measures to curb them.
Advertisement
Bank of Baroda on Tuesday issued a circular relating to Trade Credit to its zonal heads requesting to instruct the branches under their jurisdiction that they “should not issue Letters of Undertaking (LOU)/ Letters of Comfort (LOC) in favour of overseas supplier, bank or financial institution on behalf of the customers for Trade Credit effective from today, 20th February 2018 till further instructions”. The CBI also confirmed that 10 more officials of the public sector lender, including the bank’s executive directors, were being questioned, without giving out their names. During the demonetization Nirav Modi was very active in changing of currency and sale-purchase of diamonds and jewellery. A November-2017 resolution by ANM Enterprises shareholders mentions him as an NRI with an address in Dubai, UAE. Does Modi plan to take shelter in UAE? Ltd. and Firestar Diamond International Pvt. “However, now that stage appears to have passed”. It will also scrutinise the effectiveness of the various audits conducted by the banks.
