Punjab National Bank’s Internal Probe On Nirav Modi Scam Names 54 Officers

Punjab National Bank has named 54 officers in its internal investigation report on the $2 billion (nearly Rs 14,000 crore) scandal involving fugitive diamantaire Nirav Modi, a senior government official told BloombergQuint.

The persons named range from those at the top management to clerks, the official said. “They include assistant general managers, deputy general managers and officials from the treasury department as the letters of credit were issued without making entries in the system.”

News agency Reuters was the first to report on the internal investigation, which has not been made public.

Since Gokulnath Shetty, the former deputy manager of PNB Brady House branch — the epicentre of the fraud—was not transferred for seven years, contrary to the state-run lender's transfer policy, the people involved in stopping his transfer have also been named. Shetty, who has also been named in a CBI charge sheet, was not transferred from the Mumbai branch despite three orders being issued in this regard, according to the report.

BloombergQuint couldn't reach Shetty for a comment. PNB didn't respond to queries sent over email.

According to the report, Shetty, who joined the forex division at the Brady House branch in April 2010, issued the first fake credit guarantees of Rs 10.5 crore in March 2011 to Nirav Modi's firms through SWIFT messages, bypassing the bank's internal system. The report added that Shetty should only have been able to approve transactions of up to Rs 25 lakh without approval from senior officials.

The internal report also flagged off the following concerns:

• Shetty escaped detection because he did not log his SWIFT transactions on the bank's internal software - something he was supposed to do because the two systems were not integrated.
• The bank's international banking department and the IT division had delayed the integration work.
• They had also not complied with central bank advisories in 2016 calling for a comprehensive audit of SWIFT systems in use.
• Missing monthly reports from the Brady House branch despite which a compliance certificate was granted.
• Bank did not notice a big surge in transactions at the branch.
• The branch did not respond to almost 50 percent of the observations flagged in its annual inspection report.