THE CBI on Thursday told a special court that the Union government has granted sanction to prosecute Punjab National Bank Executive Director K V Brahmaji Rao, facing charges in the alleged multi-crore PNB fraud, paving way for Rao to now stand trial like the other chargesheeted accused.
In August, the government had given sanction for prosecution of former PNB CEO Usha Ananthasubramanian and executive director Sanjiv Sharan — both accused in the alleged Rs 13,578 crore fraud caused by wanted diamantaire Nirav Modi and jeweller Mehul Choksi. The agency had sent repeated reminders to the government for sanction to prosecute Rao.
“Earlier this week, we had received prosecution sanction from the government on Rao and it has been communicated to the court. Now, with the sanction in place, Rao like others would also stand trial,” a senior official said.
In its two chargesheets filed in the case (accessed by The Indian Express), the CBI had said that four officials — Ananthasubramanian, executive directors Rao and Sharan as well as general manager Nehal Ahad — had “misled” the RBI by sending a false response to a questionnaire sent by the regulatory body in 2016. It added that the four “failed to take meaningful and corrective measures”, thereby failing to protect the interest of the bank despite circulars and caution notice issued by the RBI.
The CBI had claimed that not only did the officials mislead the RBI, they also did not visit the Authorised Dealer (AD) branches. The visit was conducted only in December 2017 when the bank learnt about the fraud. “There is no basis to support the above misleading reply and undertaking by Ahad as no specific instructions were issued to Authorised Dealer branches until December 2016, conveying RBI instructions downwards. Similarly, no action taken reports were obtained from field units nor any visit was conducted to PNB Brady house branch in this regard until December 2017,” the chargesheet said.
It added: “In pursuance of criminal conspiracy, the four officials had committed acts of criminal misconduct by not implementing the RBI circulars dated August 3, 2016 , August 10, 2016 and November 11, 2016, despite having full knowledge that a similar fraud had occurred prior to the issuance of the said circulars, wherein their overseas branch, PNB, Dubai has extended buyer’s credit facility on two occasions for an aggregate amount of Rs 40.73 crore against LoUs issued by IOB, Chandigarh. The said acts of omissions created an environment and paved the way for other perpetrators to commit this fraud of such huge magnitude, causing wrongful loss that could otherwise have been averted.”
“Usha Ananthasubramanian, K V Brahmaji Rao, Sanjiv Sharan and Nehal Ahad, who were holding responsibilities for preventing frauds, have not safeguarded the interest of PNB inspite of the circular and caution notice and thereby have facilitated the fraud committed by the other accused,” the chargesheet said.
On the two executive directors and Ahad, the chargesheet stated, “Without any follow up action, the three accused persons sent a false response to questionnaire by RBI. The four accused officials did not protect the interest of the bank despite circulars and caution notice issued by RBI.” On Rao, the chargesheet said: “As executive director, he was responsible for supervising Mumbai Zone and Mumbai City Circle, under which PNB Brady House branch falls. He was also responsible for supervising the Fraud Risk Management Treasury through NOSTRO reconciliation, audit and inspection of branches.”