Nirav Modi defrauds PNB of Rs.11,400 crores and flees away

Nirav Modi with PM Narendra Modi at Davos on 24-Jan-2018

Nirav Modi, who defrauded PNB by over Rs.11,000 crores

• Punjab National Bank (PNB) said on 14-Feb-2018 that it had been defrauded of about Rs 11,400 crores by jeweller Nirav Modi, his maternal uncle Mehul Chinubhai Choksi, and other relatives through a clutch of companies they own.
• Two of its employees were involved in the scam, where the bank’s core banking system was bypassed to raise payment notes to overseas branches of other Indian banks, including Allahabad Bank, Axis Bank, and Union Bank of India, using the international financial communication system, SWIFT.
• As the payment request was raised by PNB, and therefore, the payment would have to be met by the Delhi-based Punjab National Bank. PNB in a letter to banks, indicated clearly that it was in no mood to pay back and alleged connivance of employees at the foreign branches of other Indian banks. The banking system is heading towards a protracted legal battle as other banks will start suing PNB over non-payment of dues and refusal to honour commitments.
• An age-old method employed to defraud the banking system. It involved LoUs raised at the PNB’s Mumbai office by firms owned by Modi and his family. A LoU works like a bank guarantee, which the importer can sell to other banks at a discount. At the end, the bank that holds the LoU goes back to the issuer bank (PNB in this case) and gets its due. The issuer bank (PNB) recovers its due against the LoU from its client (Modi).
• However, issuance of the LoU involves a lot of process and to mitigate the risks of fraud, banks insist the client deposit an equivalent amount of assets, mainly cash, in the local branch, to avail of the overseas facility. Since LoU expires within a maximum of 180 days and fresh LoU needs to be issued. Since first LoU was issued to Nirav Modi in 2011, several fresh LoC's issuance could not have happened with political patronage and connivance of bank's top brass.
• PNB disclosed that it detected fraudulent and unauthorised transactions worth around $1.78 billion (approximately Rs 11,400 crores) “for the benefit of a few select account holders” with the help of the bank staff based in one of its Mumbai branches. “In the bank these transactions are contingent in nature and liability arising out of these on the bank shall be decided based on the law and genuineness of the underlying transactions,” the bank said.
• DFS Secretary Rajiv Kumar said this seemed to be an isolated case and would not impact other banks.
• Nirav Modi & his family are believed to have left the country several days before lodging of FIR by CBI and is believed to be in Switzerland.  
• An interesting reader's comment ...
  

  "You cannot fault Rajiv Kumar, for sure. He knows which side of the bread is buttered, and so, unsolicited, he jumps to the govt's defence by invoking 2011. But deafening silence from the FM, the RBI, the Finance Secretary -- not to mention the PM for whom, understandably, Rs 11k Crore is a measly little sum totally undeserving of his attention. He is busy doing what he does best: address election meetings where, other than subtly stoking communal fires, he speaks grandly of Vikash. Surely his Vikash model has stood Nirav Modi in good stead, and as far as the ordinary Indian citizen is concerned, our PM couldn't care less, as every Bharatiya happens to know by now. So the field is left open for the usual buffoonery of Ravishankar Prasad and a pugnacious (though completely witless) intervention by the Raksha Mantri. Nobody has apparently suggested to Nirmala Sitaraman that she had better take care of the country's porous borders -- which happen to be under her charge and are leaking all the while -- rather than talking about things she doesn't have the foggiest idea about. But, then, who will advise whom about what in the madhouse that Modi's India has turned into?"

SNAP SHOT

1. On 14 Feb 2018, the CBI received complaints from PNB, which detected a Rs 11,292 crore fraud involving jeweller Nirav Modi.
2. The number of suspended employees now stands at 18.
3. Nirav Modi’s home, offices in Mumbai, Delhi and Surat were raided by the ED on 15 Feb 2018.
4. The CBI and the ED have moved separate applications with the EAM, seeking the revocation of passports of Modi and his partner Choksi.
5. PNB suspended 10 officials from its Mumbai branch in connection with the case.
6. In two days, PNB lost over Rs 8,000 crore of market valuation.
7. The case turned political after the Congress termed Nirav ‘Chotta Modi’.
8. Officials said Modi and his family fled India in the first week of January, days before the first complaint was filed.

Power corrupts and absolute power corrupts absolutely. 

All those experiments have a bad ending.

Read the source article

Gem of a scam - Business Standard

Every new government will be 'clean' during first 1-2 years. Their misdeeds will surface by end of 3rd year or later. BJP & Modi are no exception. Modi just followed the time tested corruption path established by Congress and even more reckless. Only narrative is different. The fact that more than 90% of political donations reached BJP coffers speaks volumes about quid pro quo's involved. While the Nirav Modi's scam occurred during past 1-2 years, BJP attempting to link it to Congress invoking 2011 is just nonsense. BJP may or may not be responsible for this scam, but the way they are responding leaves people of India without any doubts about their involvement. There is no way BJP or any political party will accept their wrong doings, the best - people of India can do is to defeat them in 2019 general elections. This may pave way to Congress regain power but we hardly have choice. In Indian political arena even a saint ascending to power will end up in corruption, cronyism, nepotism etc. Even in USA, no one ever retired from Presidency more respected by political friends and foes alike. Such is the power of power & money.