THE PUNJAB NATIONAL BANK DEBACLE
THE SCAM WE ALL HAVE HEARD OF
Abhivyakti Mishra, Researcher
Scams and heists look so cool when you watch them on your screen. But when they happen in real lives, many innocents suffer because of the scam. Punjab National Bank Scam is one of them. A long-run case of two businessmen who managed to escape the country after ideating the biggest scam in the history of the same. This article explores the PNB Scam by its timeline and an explainer of the same.
Punjab National Bank (PNB) is the second-largest Public Sector Bank running in the country. Recently, it made headlines, when Oriental Bank Commerce and United Bank India, merged with Punjab National Bank under the major merging drives in the country.
But do you know why the common man in India knows Punjab National Bank for? It is unfortunately synonymous with the biggest money laundering scam in the country. A scam that not only shook the common man stakeholders in the bank but also unleashed the ugly corruption system, which is unfortunately deep-rooted in these institutions. PNB filed an FIR with the CBI, on January 29, 2018, saying that bogus LoUs worth Rs 2.8 billion (Rs
280.7 crore) were issued on January 16. In this case, PNB named three diamond companies: Diamonds R Us, Solar Exports, and Stellar Diamonds. Nirav Modi then became very much talked about the name, a name who was just a jeweler but became the biggest scam overnight.
Jeweler and designer Nirav Modi, his maternal uncle Mehul Choksi, and his relatives, as well as certain PNB workers, were the main defendants in the case. Nirav Modi and his family fled India in early 2018, only days before the scam was made public. The PNB scam has been labeled the largest banking fraud in Indian history.
THE TIMELINE OF THE FIASCO
January 29, 2018: The Punjab National Bank (PNB) has filed a police charge alleging Rs 281 crore in fraud against Nirav Modi, Mehul Choksi, and others.
February 5, 2018: The suspected scam is being investigated by the Central Bureau of Investigation (CBI).
February 16, 2018: Nirav Modi's house and offices have been raided by the Enforcement Directorate (ED), which has seized a total of Rs 5,674 crore in diamonds, gold, and jewelry.
February 17, 2018: The CBI is the first to make an arrest in this case. Two PNB staffers and a Nirav Modi group executives were arrested.
February 17, 2018: In connection with the PNB fraud, the government has put Nirav Modi and Mehul Choksi's passports on hold for four weeks.
February 21, 2018: Nirav Modi's CFO and two other top executives have been detained by the CBI. It also protects his Alibaug home.
February 22, 2018: The ED seizes nine expensive vehicles owned by Nirav Modi and his companies.
February 27, 2018: Nirav Modi, a diamond merchant, is the subject of a bailable arrest order issued by a magistrates court.
June 2, 2018: Interpol issued a Red Corner Notice for money laundering against Nirav Modi.
June 25, 2018: Nirav Modi's extradition is being sought by the ED at a special court in Mumbai.
August 3, 2018: The Indian government has sent the UK authorities a request for Nirav Modi extradition.
August 20, 2018: After Nirav Modi informs Indian authorities about his presence in London, CBI officials request that Interpol Manchester hold him.
December 27, 2018: Nirav Modi is living in the United Kingdom, as told by the UK government.
March 9, 2019: The Telegraph, a British publication, encounters Nirav Modi on the streets of London and establishes his presence in the nation.
March 9, 2019: The UK government submitted an extradition request for fugitive diamantaire Nirav Modi to a UK court for consideration, as asserted by the ED.
March 18, 2019: The UK Home Office transferred the Indian government's plea to Westminster court in London, which issued an arrest order against fugitive Nirav Modi.
March 20, 2019: Nirav Modi was apprehended in London and taken to Westminster Court, where he was denied bail.
March 20, 2019: Nirav Modi has been transported to Her Majesty's Prison (HMP) Wandsworth, where he will remain until March 29.
March 29, 2019: Nirav Modi's second bail plea is denied by a Westminster- magistrates court in London, which says there are " strong grounds" to believe he will not surrender. The judge has set the next hearing date for April 26th, when he will appear via video link from jail.
May 8, 2019: Nirav Modi has been denied bail for the third time, and will be detained in the United Kingdom.
On June 12, 2019: A UK court denied Nirav Modi's bail for the fourth time, citing concerns that he may flee the country.
August 22, 2019: Nirav Modi's remand has been prolonged till September 19, with an extradition hearing in the United Kingdom scheduled for May 2020.
November 6, 2019: Nirav Modi’s new bail application was rejected by the UK Court.
May 11, 2020: The five-day extradition trial of Nirav Modi in the PNB fraud case has begun in The United Kingdom.
May 13, 2020: In the money laundering case against Nirav Modi, the Indian government has submitted fresh evidence.
September 7, 2020: A new video tour of Mumbai's Arthur Road Jail has been presented to a UK court.
December 1, 2020: Nirav Modi's remand has been prolonged, with final hearings scheduled for 2021.
January 8, 2021: On February 25, a UK court will make a decision on Nirav Modi's extradition case.
February 25, 2021: A court in the United Kingdom has ruled. Nirav Modi might be extradited to India to face money laundering and fraud accusations.
THE EXPLAINER OF THE FIASCO
On March 10, 2011, Nirav Modi received his first fake assurance from PNB, and over the next 74 months, he received 1,212 more. The scam ballooned to over Rs 14,000 crore in 2018. In connection with the Punjab National Bank fraud case, the Enforcement Directorate has seized assets worth Rs 14.45 crore from the Gitanjali Group of companies and its absconding director, Mehul Choksi.
The ED investigation is predicated on a Central Bureau of Investigation FIR filed against Mr. Choksi, Gitanjali Gems, and others. They allegedly defrauded the bank in collusion with some personnel by obtaining letters of undertaking and enhancing Foreign Letters of Credit (FLC) without following the proper procedures, resulting in massive losses.
At PNB's Brady House branch in Fort, Mumbai, bankers utilized forged Letters of Undertakings (LoUs). The Memorandums of Understanding were signed in favor of Indian bank branches for the import of pearls for a term of one year. From the day of shipping, the Reserve Bank of India allowed a total time period of 90 days. This rule was disregarded by Indian banks' abroad offices. They were not able to share any documents or information with PNB that were provided to them by the firms when they applied for loans. The Enforcement Directorate (ED) discovered bank token devices used by the fugitive diamond trader to transfer illegal cash to international sham firms.
The investigation discovered that Nehal Modi, Nirav Modi's brother, had destroyed the gadgets and had even secured a server in the United Arab Emirates (UAE) shortly after the fraud was discovered. These fictitious companies, which were domiciled in the British Virgin Islands and other tax havens, had been receiving the fake PNB LoUs. In the PNB fraud case, the enforcement agency has confiscated movable and immovable properties totaling Rs 2362 crore. The ED investigation is predicated on a Central Bureau of Investigation FIR filed against Mr. Choksi, Gitanjali Gems, and others. They allegedly defrauded the bank in collusion with some personnel by obtaining letters of undertaking and enhancing foreign letters of credit (FLC) without following the proper procedures, resulting in massive losses. A 1,460-square-foot flat in Mumbai's Goregaon's O2 Tower, as well as movable assets such as gold, platinum jewelry, diamonds, and pearl-silver necklaces, watches, and a Mercedes Benz automobile, are held in the names of the Gitanjali Group of companies and Mr. Choksi.
To avoid detection, the FLCs used smaller values at first, and then the amounts were boosted by four to five times. The documentation of initial FLCs was found at the bank branch where the fraud was conducted, but no import papers for the enhanced quantities were found. A large amount of the fraudulent FLC payments were utilized to settle the foreign exporter's debt originating from previous FLCs or bill
In this case, the agency had previously attached properties valued at over 2,550 crores. Mr. Choksi is being sought by the Indian government in Antigua and Barbuda. He had fled the nation in January 2018 and had acquired Antiguan citizenship prior to that. Later he was bought back to India in 2021.