PMO got complaint against Nirav Modi in July 2016; PNB says it discovered fraud in Jan 2018

On February 6, few in the country new much about Nirav Modi beyond billboards advertising his jewellery. On that day, a team of analysts tweeting from the handle @BrainandMoney put out this intriguing tweet: “Hearing from our Bookies big scam of Rs 9200 crore coming in #PNB. Big Bank official told us now.................... Will it come Tomorrow or Day after ? Let's see”.

Eight days later, on February 14, India’s second largest public sector bank Punjab National Bank said in a regulatory filing to the stock exchanges, that it had detected a massive fraud in one of its branches in Mumbai, “for the benefit of a few select account holders with their apparent connivance”. PNB said the quantum of such transactions was to the tune of a whopping $1,771.69 million (around ₹11,515 crore). The amount of fraudulent transactions is equivalent to eight times the bank's net income of about ₹1,320 crore ($206 million). The bank said that: "The matter is already referred to law enforcement agencies to examine and book the culprits as per law of the land."

It turned out that on February 5, the Central Bureau of Investigation had booked billionaire diamond service provider Nirav Modi, his brother, wife and a business partner for allegedly entering into a criminal conspiracy with the officials of Punjab National Bank to cheat PNB of over ₹280.70 crore in 2017. Following the complaint, the CBI registered an FIR under Indian Penal Code sections related to criminal conspiracy, cheating and provisions of the Prevention of Corruption Act against the four.

The stock of Punjab National Bank, which was trading at ₹149.20 per share on February 14 morning, was down by 12.79% on the Bombay Stock Exchange, by the time of writing on February 15.

Spate of new developments on PNB-Nirav Modi case on February 15

A flurry of new facts about the case emerged on Thursday, February 15.

First, the Enforcement Directorate in the early morning swooped down on multiple premises in Mumbai, Surat and Delhi belonging to Nirav Modi and other persons accused in the case. The ED had filed a case under the Prevention of Money Laundering Act (PMLA) after going through the CBI FIR.

It emerged that the CBI had also raided the residence of Modi, his brother Nishal, wife Ami and Mehul Chinubhai Choksi, all partners of Diamond R US, Solar Exports and Stellar Diamonds and two bank officials—Gokulnath Shetty (now retired) and Manoj Kharat, who were also named in the FIR as accused. On February 14, the CBI received two fresh complaints from PNB allegedly against Modi and a jewellery company alleging fraudulent transactions worth about ₹11,400 crore.

Then, CNN News 18 quoting Enforcement Directorate sources, said that Nirav Modi was not in the country, but in Switzerland. The media house tweeted further that Nirav Modi had in fact fled India before the first CBI FIR was filed on Jan 31. Soon ANI, quoting “official sources”, reported that Nirav Modi left the country on January 1, 2018.

Later on February 15, PNB MD Sunil Mehta, addressing the media, said that the scam had begun in 2011, was detected by PNB only in the third week of January 2018, and the CBI was informed in February.

Shortly after, Defence Minister Nirmala Sitharaman was telling CNN that this scam began during the “UPA regime”.

If that were so, it leads to the obvious question of why it took seven long years for PNB to detect a fraud on this scale. And why was someone as senior as the Defence Minister being sent out to try and pin the blame for the PNB scam on the UPA government? Was someone somewhere panicking, and trying to deflect blame?

Soon, a possible reason for the panic became clear.

PNB says it discovered scam only in January 2018; News reports and Congress leader says PMO was informed about a complaint against Nirav Modi in July, 2016

Congress spokesperson Randeep Surjewala said that ”On July 26, 2016, PM was handed with all papers regarding Nirav Modi and one of his relatives. It was said that complaint had 42 FIRs. PMO acknowledged the complaint, they also sent registrar of companies to take some action. But in the end the govt couldn't do anything. How can Nirav Modi and Mehul Choksi dupe the entire banking system through forged Letters of Understanding under the nose of Modi govt? Who is responsible for biggest bank loot scam unleashed by chhota Modi?”

A CNN News18 tweet seemed to confirm Surjewala’s charge about the PMO receiving a complaint:

National Herald has not seen the complaint to the PMO and is unaware if it relates directly to Punjab National Bank, or to some other allegations against Nirav Modi.

Congress and other Opposition leaders, however, lost no time in accusing the government of enabling Nirav Modi to flee.

Congress President Rahul Gandhi said diamond merchant Nirav Modi's Rs 11,500 crore fraud in the country's second-biggest state-run bank was a guide to "looting India", which involves getting closer to and hugging Prime Minister Narendra Modi and then slipping away from the country, like liquor baron Vijay Mallya.

"Guide to looting India by Nirav Modi. Hug PM Modi. Be seen with him in Davos. Use that clout to: steal 12,000 crore. Slip out of the country like Mallya while the government looks the other way," Gandhi tweeted.

Gandhi's tweet came after Congress MP Gaurav Gogoi posted a picture of Prime Minister Modi with Indian CEOs at the World Economic Forum in Davos, taken on January 23, 2018. The fugitive diamond merchant is seen in the group photo standing in the second row, with Prime Minister Modi seated in the centre of the first row. "What criteria does the Prime Minister use to select the CEOs accompanying him on foreign trips," Gogoi asked in his tweet.

But Minister of State for finance SP Shukla replied that “We were not in govt in 2011, if Congress is making allegations, were they sleeping from 2011-14? They should've probed it. This govt is taking cognizance of matters & probing them.”

CPI(M) General Secretary Sitaram Yechury posted the same picture, pointing out that the businessman Modi may be in Switzerland where he went with Prime Minister Modi.

"If this person had fled India before the FIR on January 31, then he is here, photographed at Davos with the PM, a week before the FIR, after having escaped from India? Modi govt must clarify," Yechury said, adding that "There is a pattern in how people who have defrauded banks in India, are allowed to escape by the Modi government."

Delhi Chief Minister Arvind Kejriwal accused the Modi government of helping the prime accused in the PNB fraud, Nirav Modi, to flee from India. "Is it possible to believe that he or Vijay Mallya left the country without active connivance of the Bharatiya Janata Party (government)?" the Aam Aadmi Party leader asked in a tweet.

West Bengal Chief Minister Mamata Banerjee quickly followed, saying “Look what happened at Punjab National Bank ? A scam of more than Rs 11,000 crore. People's savings are not safe. There must be a thorough, time bound enquiry.”

Watch this space for further developments on the PNB Scam—and who all are responsible.

With IANS inputs.