Mehul Choksi firms siphoned off over Rs 6,000 cr from Punjab National Bank: CBI

Companies owned by fugitive diamantaire Mehul Choksi have allegedly siphoned off over Rs 634496 crore from the Punjab National Bank PNB using fraudulent letters of undertaking and foreign letters of credit the CBI has alleged in its supplementary chargesheet detailing the agencys threeyearlong investigationThe findings were submitted by the CBI in a supplementary chargesheet filed before a special court in Mumbai last week where it alleged that the PNB was conned by its employees who were hand in gloves with Choksi and his company executives and who facilitated the scam as part of a criminal conspiracyThe PNB officials at the banks Brady House branch in Mumbai issued 165 letters of undertaking LoUs and 58 foreign letters of credit FLCs during MarchApril 2017 against which 311 bills were discountedThese LoUs and FLCs were allegedly issued to Choksis firms without any sanctioned limit or cash margin and without making entries in the banks central banking system to evade any scrutiny in case of a defaultLoUs are a guarantee given by a bank on behalf of its client to a foreign bank If the client does not repay to the foreign bank the liability falls on the guarantor bankBased on these LoUs SBIMauritius Allahabad BankHong Kong Axis BankHong Kong Bank of IndiaAntwerp Canara BankMamana and SBIFrankfurt lent moneySince the accused companies did not repay the amount availed against the said fraudulent LoUs and FLCs the PNB made the payment of Rs 634497 crore USD 96518 million including the overdue interest to the overseas banks which had advanced buyers credit and discounted the bills against the fraudulent LoUs and FLCs issued by the PNB the supplementary chargesheet allegesAccording to the CBI LoUs worth over Rs 315431 crore and the 311 bills worth over Rs 308624 which were discounted against the 58 FLCs remain outstandingThe PNB had accused Choksi of duping it to the tune of Rs 7080 crore CBI officials said the matter is still under probe and the final figures of loss suffered by the bank can only be determined once all the LoUs are examinedThe CBI is continuing its probe into the LoUs issued in 2015 and 2016 and the fraudulent amendments made in FLCs in 2014 2015 and 2016 by bank officialsIn addition to the 18 accused named in the first chargesheet the agency has named four accused in its supplementary report including the former international head of the Gitanjali Group of Companies Sunil Verma two PNB officials singlewindow operator Sagar Sawant and AGM Sanjay Prasad and a director of the Gili and the Nakshatra brands under the group Dhanesh ShethThe supplementary chargesheet filed more than three years after the first chargesheet in the case coincides with the legal proceedings against Choksi in a court of Dominica where he was arrested for illegal entry on May 24 after his mysterious disappearance from neighbouring Antigua and BarbudaThis supplementary chargesheet after three years shows that it is only an attempt to cover up anomalies that the defence had pointed out in the first chargesheet Moreover the addition of section 201 IPC for destruction of evidence is not legally tenable as a document becomes evidence only after its filing in the court and the allegations are of a period much prior to the FIR Choksis lawyer Vijay Aggarwal saidChoksi was living in Antigua and Barbuda since 2018 after he fled India in the first week of January that year weeks before the scam was reportedHe and his nephew Nirav Modi have allegedly siphoned off over Rs 13000 crore of public money from the PNB using LoUs and FLCs by bribing officials of the banks Brady House branchThe agency has slapped charges of criminal conspiracy cheating breach of trust disappearance of evidence falsification of accounts bribery and criminal misconduct by a public servant in its supplementary chargesheetThe CBI probe has found that accused PNB official Gokulnath Shetty in a conspiracy with Mr Choksi had in an unauthorised manner issued 165 LoUs from the PNBs Brady House branch between March 1 and April 29 2017 on behalf of Gitanjali Gems 113 LoUs Gili India Limited 35 LoUs and Nakshatra Brands 17 LoUs all accused firmsThe purpose of this trade transaction was shown as purchasing freshwater pearls from Shanyao Gong Si Limited and 4Cs Diamond Distributors both based in Hong KongThe CBI has found that the accused companies availed 142 buyers credit amounting to Rs 301138 crore and did not make payments on the due date wilfully causing loss to the bank and corresponding profits to themselvesIt is alleged that Choksi and Modi used the mechanism to get credit from foreign banks which was not repaid bringing the liability of over Rs 13000 crore on the PNBThe investigation has further revealed that the fraud was allegedly perpetrated despite circulars issued by the Reserve Bank of India RBI which was in the knowledge of senior PNB officialsFurther the PNB officials did not implement the circulars and caution notices issued by the RBI regarding safeguarding the SWIFT international banking messaging system operations and instead misrepresented the factual situation to the RBI the agency has allegedThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever