May 23, 2018

PNB fraud case: CBI files chargesheet in Rs 13k crore loan default

15 May 2018, 10:27 | Donald Newman

PNB scam: CBI files its first charge-sheet

Nirav Modi

Cracking the whip, the government on Monday asked the board of Allahabad Bank to take away all the powers of its CEO and MD Usha Ananthasubramanian, former chief of Punjab National Bank, in connection with the $2 billion fraud in Punjab National Bank (PNB).

Former PNB managing director Usha Ananthasubramanian, who now heads Allahabad Bank, and Nirav Modi's brother, Nishal, are also among the 22 people named in the chargesheet.

Jeweller Nirav Modi used fake letter of undertaking (LoUs) to defraud PNB of over Rs 13,000 crore in connivance with bank officials by exploiting the loophole of non-integration of SWIFT with the Core Banking Solution.

Additionally, a separate chargesheet pertaining to the second FIR registered by the CBI will feature Mehul Choksi.

Both Norav Modi and Choksi had left the country before PNB filed the complaint with the CBI.

Currently, the probe agencies are investigating the matter and have also seized many properties of Nirav and Choksi.

PNB said on Tuesday it had set aside a higher-than-required 71.78 billion rupees in the three months to March 31, or half of the total 143.57 billion rupees it owes other banks for the illegal guarantees.

"The (PNB) board has chose to divest EDs of the functional and financial responsibilities and have also requested the government to replace them", Kumar said, adding the government is committed to taking strict action against erring officials.

The bank has made provisions of Rs 7,178 crore - amounting to 50% of the fraud amount.

Investigators found that the funds were siphoned off to purported overseas supplier firms that was a set-up by Nirav Modi and his firms.

As per the quarterly number, the RBI detected a gross NPA divergence of Rs 2,207 crore during FY17.

In its 7500-page charge sheet, the CBI had accused 25 people, including Usha Ananthasubramanian, the chief executive officer (CEO) and managing director of PNB when the fraud was perpetrated. "They misinterpreted the directives", a CBI officer said.

The federal government owns controlling stakes in state-run lenders including Allahabad Bank and PNB. Chartered Accountant Subhash Kumar Rambia has also been charged with not mentioning loans of Rs 1,700 crore taken by each of the three accused companies in their books, it said. Total income came in at ₹12,946 crore, against ₹14,989 crore in the same quarter past year. Internal auditors Mohinder Sharma and Bishnubrata Mishra sat in the same room with Shetty, but did not point out the system failures or illegalities and chartered accountants did not raise red flags over unsecured loans.

Modi's group companies - Diamonds R US, Stellar Diamonds, and Solar Exports - are also named in the chargesheet as borrowers. Ananthasubramanian was the CEO of the PNB at that point in time, said the CBI.

The CBI filed the charge sheet for alleged criminal conspiracy, cheating, forgery and provisions of Prevention of Corruption Act.

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