Three held in Nirav-PNB fraud

Mumbai: The Central Bureau of Investigation (CBI) arrested three persons, including two public servants, in a multi-crore fraud case involving international diamond businessman Nirav Modi on Saturday. Two employees of Punjab National Bank (PNB) who were working in south Mumbai branch and Hemant Bhatt, the authorised signatory of Modi were arrested.

The banker duo, Gokulnath Shetty, the then deputy manager of the Brady House branch of PNB) and Manoj Kharat, the single window operator at the same branch, was named in the complaint letter submitted by the PNB to the CBI. They had issued a letter of undertakings (LOU) for Nirav Modi’s diamond business without following due procedure and without maintaining the documentary records. The CBI also conducted searches at PNB’s Brady House branch in south Mumbai and seized documents and old records from the branch office. The investigators are examining roles of six of the branch officials for their alleged connivance in the fraud.

Shetty and Kharat were arrested in the early hours of Saturday from separate locations by the CBI and were interrogated. Bhatt was subsequently summoned for questioning and after the interrogation, was placed under arrest, officials said.

They were produced before the special CBI court that was informed about the modus operandi of the accused persons. Shetty and Kharat connived with the directors and other employees of companies Diamonds R US, Solar Exports and Stellar Diamonds. Modi, his wife Ami, brother Neeshal and uncle Mehul Choksi are business partners in these companies.

During the interrogation of Shetty and Kharat, the officials learnt that the duo had issued fraudulent SWIFT messages that were not entered in the trade finance module of the Core Banking System (CBS) to avoid detection.

The logs in the swift were used by many officials including Shetty and were accessed via a password in the capacity of a maker/verifier/authorizer to enable the SWIFT messages. All eight LOUs to the tune of '280.7 crores (USD 4.42 crore) were issued on February 9, 10 and 14 in 2017, officials have learnt.