| Mumbai |
Updated: May 19, 2018 10:40:56 am
In the two chargesheets filed in the alleged Rs 13,570 crore fraud in Punjab National Bank (PNB) by diamantaires Nirav Modi and Mehul Choksi, the Central Bureau of Investigation (CBI) has said that four senior officials associated with the probe “misled” the RBI by sending a false response to a questionnaire sent by the regulatory body in 2016. It also states 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, according to the chargesheet reviewed by The Indian Express. The four officials are Usha Ananthasubramanian, MD & CEO, Allahabad Bank, who was earlier the CEO of PNB, two Executive Directors (EDs), PN, KV Brahmaji Rao and Sanjiv Sharan, and General Manager Nehal Ahad.
The chargesheet states that in 2016, after a fraud of similar nature was detected at the Indian Overseas Bank (IOB), Chandigarh branch, the RBI sent three circulars dated – August 3, 2016, August 10, 2016 and November 11, 2016. It also sent an urgent questionnaire dated October 27, 2016, seeking specific response from PNB related to SWIFT and operational procedures or measures in place for issuing Letter of Undertakings, Letter of Comforts, Letter of Credits and as to how PNB undertakes reconciliation of Society for Worldwide Interbank Financial Telecommunication (SWIFT) and Core Banking System (CBS).
“The circulars and caution notice issued by RBI was brought to the notice of the four senior officials and the same was marked downward without taking any meaningful corrective measures, follow up and necessary reconciliation of SWIFT- CBS by these accused persons”, the chargesheet states. “This was dealt by the four senior officials and instead of replying to the queries in its true letter and spirit, Ahad prepared a misleading reply dated October 31, 2016, and sent the same to RBI after getting it approved by Sharan wherein he misrepresented to the RBI stating all outward SWIFT messages are being sent only after making entry in CBS, without entering in CBS, no financial SWIFT messages can be sent. Reconciliation to verify all outward messages transmitted by the bank are captured in CBS and it is being done by AD branches. The outstanding exposures on account of LC/LoU is being tracked by AD branches. Buyer’s credit proceeds are credited as per instruction of LoU issuing bank,” the CBI quotes from the reply allegedly sent by Ahad to RBI affixed to the chargesheet.
The CBI claims that not only the officials misled RBI, they also didn’t conduct any visit to the Authorised Dealer (AD) branches and 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.
“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 crores 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,” the chargesheet states.
“Usha Ananthasubramanian, KV 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 role of Ananthasubramanian, the chargesheet states, “Anathasubramanian functioned as the MD and CEO of PNB between August 2015 and May 2017, relevant circulars/caution notices/urgent questionnaire issued by RBI were brought to her notice and she dealt with the same. Inspite of her knowledge about the modus operandi in SWIFT frauds which involved PNB, Dubai, and IOB, Chandigarh, as indicated by her noting on the IT department note dated August 23, 2016, she did not take meaningful corrective measures in her capacity as the executive head of the bank and had unauthorizedly delegated the RBI guideline work to her subordinates without any follow up action or action taken report, thereby facilitating the accused in continuance of fraud.”
On the two EDs and GM Ahad, the chargesheet states, “Without any follow up action the three accused persons sent a false response to the questionnaire by RBI. The four accused officials did not protect the interest of the bank despite circulars and caution notice issued by RBI.”
On Sharan, the chargesheet said, “Sharan had approved the misleading reply to the urgent questionnaire dated October 27, 2016, of RBI prepared and sent by Ahad”.
On Rao, the chargesheet said “As ED, 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.
On Ahad, the CBI claims that “He was responsible for the implementation of RBI circulars, caution notices etc. relating to SWIFT reconciliation with CBS. Ahad had not only misrepresented to the urgent RBI questionnaire, he also had not taken any action for implementation of the same except for forwarding them downwards”.
‘Payment not made wilfully’
The CBI in its chargesheet against Mehul Choksi and the arrested accused states that the three accused firms -Gitanjali Gems Ltd, Gili India Ltd and Nakshatra Brands Ltd got unauthorised issued 90, 35 and 17 Lous respectively through arrested accused Gokulnath Shetty, former Deputy Manager, PNB, Brady House branch and Manoj Hanumant Kharat, SWO, PNB, Brady house branch during 2017. “The firms willfully did not make the payment on the due date causing wrongful loss of Rs 3032.12 crores to PNB,” it states
“The counter indemnity was deliberately not signed by Shetty making it infructuous and unenforceable. In furtherance of the criminal conspiracy, Shetty dishonestly and fraudulently returned the original applications with the documents submitted by Gitanjali Gems and the other accused companies back to them at the instance of other arrested accused Vipul Chitalia who woking as Vice President for the three accused firms,” the chargesheet states.
On the role of the auditors and other managers, the chargesheet mentions, “Mohinder Kumar Sharma, Chief Manager who was the Chief Internal Concurrent Auditor posted in the PNB , Brady house during the period from November 2015 to July 2017 intentionally did not scrutinize the SWIFT messages with the aforesaid fraudulent LoU transaction and committed act of criminal misconduct in as much as he dishonestly and willfully did not reconcile and match the daily SWIFT log with the transaction in the CBS system , which resulted in the continuance of the instant fraud,” the chargesheet states. “In furtherance of the criminal conspiracy Bechu Tiwari, Chief manager, Yashwant Joshi, manager and incharge of Forex department and Praful Sawant, dishonestly and deliberately did not generate daily SWIFT log and reconcile the SWIFT transactions with data entered in CBS system which caused wrongful loss to PNB,” it adds.