According to the Central Bureau of Investigation (CBI), the billionaire diamond merchant, Nirav Modi who has skipped town after defrauding the Punjab National Bank (PNB) of thousands of crores bribed mid-level bank officials. This has been established by the investigating agency by arresting and raiding the premises of one, Yashwant Joshi, who worked as a manager in the forex department of the Mumbai branch that is alleged to be the centre of the fraud.
Apparantly, Joshi admitted to having received two gold coins weighing 60 grams and a pair of gold and diamond earrings from Modi. The articles were recovered from Joshi’s residence in the presence of witnesses and is in CBI’s custody.
“This indicates that he was in collusion with the beneficiary accused persons to cheat the bank,” CBI Inspector D Damodaran said in a court filing. “He also obtained illegal gratification from the beneficiary party for continuing issuance of fraudulent LoUs,” he added.
The CBI has arrested 14 people in the case already. This was the first time they mentioned that bribes were paid to at least one PNB official by Nirav Modi.
Joshi is in judicial custody along with four other PNB officials and a Modi associate.
PNB, India’s second-biggest state lender, has primarily accused two low-level employees of the Brady House branch of issuing the LoUs without making corresponding entries in the bank’s main software, helping the fraud to go undetected for years.
The bank uncovered the alleged fraud in Decemebr/January in which several officials were suspected of colluding with jeweller Nirav Modi and his uncle Mehul Choksi in issueing fraudulent letters of undertakings (LoUs), for their companies to raise loans from overseas branches of mostly Indian banks.
The CBI, after expanding the investigation has also arrested two internal auditors of the branch, 14 among others.
Modi and Choksi, who owns Gitanjali Gems Ltd, left India before the fraud came to light, but have said in letters and statements they were innocent.
Another Mumbai court has issued non-bailable warrants against Modi and Choksi following an appeal by the Enforcement Directorate (ED), an agency focused on foreign exchange and money laundering offences.
“Modi appears to be the prima donna in the whole saga of the fraud perpetrated on the PNB,” the directorate said in a filing to the court seen by Reuters.
“The case involves a circuitous web of routes created by the said Modi and in such circumstances, the fraudulent transactions appear to be in the personal knowledge and exclusive domain of Nirav Modi”.
Modi has yet to be tracked by the authorities, but the ED said “reportedly, Modi is presently in Hong Kong”. The agency has already seized various properties of Modi and Choksi, as banks assess the hit to them from the fraud.
State Bank of India and two other state-run banks, Union Bank of India and Allahabad Bank, are lenders who had extended credit based on the LoUs issued by PNB that were later found to be fraudulent. Allahabad Bank said on Saturday it had a $366.87 million exposure to the case.
Meanwhile, Modi has filed for bankruptcy in the US and has refused to join in the investigations blaming PNB for the closure of his business. US agencies have refused to share information about Modi’s whereabouts in the country where his wife is a citizen.