The CBI on Sunday made four arrests in connection with the alleged INR 12,636-crore fraud at Punjab National Bank perpetrated by billionaire jewellers Nirav Modi and his uncle Mehul Choksi, officials said. The agency has arrested two employees and an auditor of the Nirav Modi group of companies, while a director of the Gitanjali group of companies owned by Choksi has also been taken into custody, they said. Manish K Bosamiya, the then AGM (operations) of Firestarter International Ltd owned by Nirav Modi, and then Finance Manager Miten Anil Pandya were arrested for their alleged role in the preparation of applications for fraudulent Letters of Undertakings submitted to Punjab National Bank, they said.
Auditor Sanjay Rambhia, partner in the Chartered Accountancy firm Sampat and Mehta, Mumbai, has also been arrested in connection with the ongoing investigation, the officials said. The CBI has also arrested the then Director of Mehul Choksi’s company Gili India, Aniyath Shiv Raman Nair, in connection with the case. It was alleged that besides being one of the directors of the Gitanjali group of companies, he was the authorized signatory for the applications submitted to PNB for issuance of purported LOUs and Foreign Letters of Credit (FLCs), they said. It is alleged that Choksi and Modi got issued LoUs and FLCs of Rs 12,636 crore in favour of foreign branches of Indian banks based on fraudulent claims.
The accused officials of PNB did not enter the instructions for these LoUs and FLCs in their internal software to avoid scrutiny.They were sent through an international messaging system for banking called SWIFT, which is used to pass instructions among banks globally to transfer funds. An LoU is a guarantee which is given by an issuing bank to Indian banks having branches abroad to grant a short-term credit to the applicant. In case of default, the bank issuing the LoU has to pay the liability to the credit giving bank along with accruing interest. The PNB officials allegedly sent these messages to Indian banks — Canara Bank, State Bank of India, Bank of India, Axis Bank, Allahabad bank — located in Antwerp, Hong Kong, Bahrain, Mauritius, Frankfurt without making entries in the banking software about the LoUs. Upon receiving the messages from PNB under SWIFT, the banks abroad transferred these amounts into NOSTRO account of PNB with them. Nostro account is an account that a bank holds in a foreign currency in another bank to enable foreign trade by its clients.
