Internal PNB probe report reveals lapses lead to $2 billion scam

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A 162-page internal probe report produced by PNB officials stated that the $2 billion PNB scam escaped detection because of widespread risk-control and monitoring lapses precisely by 54 employees in many areas of the bank.

“There was enough evidence to suggest failures,” the team of four senior PNB investigators said in its report. “It was observed that blatant system violations/unethical practices/dereliction of responsibilities led the bank to such a catastrophe.”

They further said, “One of the reasons the fraud went undetected for years was because of lapses within some of the bank’s critical areas at its New Delhi headquarters, such as its credit review and international banking units.”

PNB investigators said the bank’s international banking department and the IT division had delayed the integration work. They had also not complied with central bank advisories in 2016 calling for a comprehensive audit of SWIFT systems in use.

PNB’s report stated, despite a massive missing paper trail, none of the senior inspection officers, who conducted 10 visits between 2010 and 2017 to the branch, reported anything adverse.

Probe report zeroes in 54 officials – ranging from clerks to foreign exchange managers, and auditors to heads of regional offices, who allowed the fraud to be perpetrated.

It is incomprehensible that branch staff did not notice the fraud being committed,  the report said.

Eight officials of the total 54 are among those who have been charged by the CBI for their roles in the scam earlier also.

Bank, however, did not respond to a question about what action was taken against the 54 officials mentioned in the probe report.

However, in April PNB bank’s CEO Sunil Mehta said, “We had suspended 21 officials and will not spare others found involved in lapses, and he also described the fraud as a “small turmoil”.