The Serious Fraud Investigation Office (SFIO) is widening its probe in the `12,622 crore fraud at state owned Punjab National Bank (PNB).OnWednesday, PNB managing director and chief executive officer Sunil Mehta (in pic) appeared before the SFIO here after being summoned for recording his statement in connection with the fraud. The SFIO which works under the ministry of corporate affairs is also expected to call officials of nearly 31 banks which have an exposure to the companies of diamond traders Nirav Modi and Mehul Choksi.
On Tuesday, officials from Axis Bank and ICICI Bank had also appeared before SFIO. ICICI Bank led the 31-bank consortium that extended credit to the tune of `5,280 crore to Mehul Choksi's Gitanjali Group. ICICI Bank alone had given around `500 crore working capital loan to Gitanjali Gems. Nirav Modi firms Stellar Diamond and Solar Exports and Diamonds have together borrowed close to `4,000 crore from banks.
Besides the SFIO, the Enforcement Directorate (ED) is also investigating violations of the prevention of money laundering act (PMLA) case while the Central Bureau of Investigation (CBI) is probing violations linked to the Indian Penal Code.
According to reports, the ED has said that Choksi and Nirav Modi (the diamantaire that defrauded Punjab National Bank of over `12,000 crore) diverted money to their related companies. The ED has also traced some of the money being routed back to the banks for re-issuing letter of undertaking, or LoUs. Separately, the ED is also investigating the planned listing of Choksi’s Nakshtra World, and Modi’s Firestar International. The ED has seized diamonds and precious stones from the two groups valued at `5,816 crore. The ED’s estimate of the value of precious stones seized from the two groups is based on the stock value, which is always higher than the market value of the stones.
Both Choksi and Modi have fled the country before the fraud emerged at the end of January. Now, Nirav Modi’s associate companies have filed a bankruptcy petition in the US court seeking respite. In its bankruptcy filing in New York, Firestar said liquidity and supply chain challenges were responsible for the insolvency.
It is alleged that the diamond traders got LoUs and FLCs of `12,636 crore issued in favour of foreign branches of Indian banks based on fraudulent claims. The transactions were carried out from PNB’s Brady House branch in Mumbai. CBI has so far arrested over a dozen persons, including former and current officials of PNB and companies related to Modi and Choksi.