The Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED) on Sunday searched multiple premises associated with diamond czar Nirav Modi and his family and interrogated more than 11 people in connection with the Rs 11,400 crore PNB scam.
While CBI searched the Brady House branch of PNB in Mumbai, the ED carried out raids at 45 locations across the country at stores and offices of companies owned by Nirav Modi and his family.
While it continued to interrogate three arrested accused, including two PNB officials identified as Gokulnath Shetty and Manoj Kharat, it also questioned six more PNB officials based on names disclosed by the arrested accused. These included a serving general manager of the bank, sources said. The agency has been interrogating two more PNB officials since Saturday.
“We are also questioning some officials of companies owned by Nirav Modi and his uncle Mehul Choksi. The idea is to get to the depth of the scam and see if similar frauds has been pulled off elsewhere and if there are other irregularities which have remained undetected hitherto,” a CBI officer said. He added that CBI would continue its searches at the Brady House branch of PNB on Monday.
Banks are going to remain closed on account of a holiday in Maharashtra on Monday. It was at the Brady House that Shetty and Kharat were posted and all the letters of undertaking (LoUs) were issued.
The ED is also assessing some dozen properties belonging to Modi and his family for attachment under the Prevention of Money Laundering Act.
Meanwhile, the CBI is examining balance sheets of 18 India-based subsidiaries of the Gitanjali group of companies promoted by Mehul Choksi to understand the money trail of funds taken from various banks on the basis of guarantees worth Rs 11,384 crore furnished by PNB, sources said.
It has also put under scanner officials of various other banks such the Allahabad Bank, UCO Bank, Axis Bank and Union Bank of India in connection with the case. These officials were posted in the overseas branches of these banks and were responsible for payments made to Nirav Modi’s companies against LoUs issued by PNB.
PNB has alleged that these officials did not raise any alarm for years despite the glaring irregularity of LoUs having been issued for periods extending up to one year. RBI guidelines stipulate that LoUs in case of trade in diamonds and jewellery must not be issued for more than 90 days.
According to CBI and ED, Modi and his family over the years got 293 LoUs issued through PNB and swindled the bank of Rs 11,394 crore. Companies owned by the family would get LoUs issued to make payments abroad apparently for payment against import of diamonds. These LoUs were fraudulently issued for six months to a year even though RBI guidelines say for such trade they cannot be issued for over 90 days.
When the time for settling buyer’s credit, availed against the LoUs arrived, the accused got fresh LoUs of even bigger amounts issued and used the money to settle the account of the earlier buyer’s credit. The bank employees — Shetty and Kharat — facilitating this did not make entries into the Core Banking System to avoid detection but issued SWIFT messages to ensure payments were released abroad.
“The funds raised through the said LoUs were meant to be used for payment of import bills of the accused companies, whereas it was dishonestly and fraudulently utilised for discharging the earlier liabilities on account of Buyer’s Credit Facility allowed by overseas branches of Indian banks,” the CBI FIR said.
“This way the accused, in a way, kept renewing the old LoUs, and kept rolling over the money,” the official said.