The state-owned lender Punjab National Bank (PNB) shocked the nation when it revealed that jeweller Nirav Modi, with support from its bank officials, duped the bank/s single Mumbai branch worth of Rs.11,400 crore.
It was when a bank official registered a complaint with CBI on January 29 against three companies- Diamonds R Us, Solar Exports, and Stellar Diamonds and four people including billionaire jewellery designer Nirav Modi and managing director of Gitanjali Gems Pvt Ltd, of defrauding the bank of Rs.11,400 crore.
PNB realised the scam after Nirav Modi and Gitanjali firms sought for fresh LoUs. The bank when denied the request, Nirav companies said they had earlier used the facility for many years. The bank then smells the foul play, did an investigation and mine out the scam. One of the fraud officials who helped Nirav get the LoUs had retired.
PNB bank officials had earlier helped Nirav in fraudulently issuing ‘letters of undertaking’ (LoUs) to get loans from foreign branches of Indian banks to pay the sellers. The transaction request was routed through SWIFT, the global financial messaging service, instead of the core banking system (CBS) as a result the higher authorities were unsuspected of the scam.
The PNB said that on examination of the SWIFT (international payment network) trail, it was found that a junior level branch official had unauthorizedly and fraudulently issued Letters of Undertakings (LoUs) on behalf of some companies belonging to billionaire diamond trader Nirav Modi to avail buyers’ credit from foreign branches of various Indian banks.
An Enforcement Directorate (ED) team had raided 10 locations so far including the showrooms, office and residence of Nirav Modi’s wife.
In another case, actress Priyanka Chopra has sued Nirav Modi for non-clearance of her dues for the diamond endorsements she undertook with the company. The Quantico star was appointed as the global ambassador of Nirav Modi Jewels by diamantaire Nirav.