The manner in which billionaire jewellery designer Nirav Modi has fled the country after committing the Punjab National Bank multi-crore fraud, only shows that the Modi government has failed to learn any lessons from the Vijay Mallya case. The government has often spoken about adopting zero tolerance policy about corruption but no action is taken against culprits leaving the country after committing forgery. Is the government serious about fighting corruption or is it merely paying lip service? Congress attacked the government for its failure to take steps to prevent “independent India’s biggest fraud” despite having information about it. On one hand, the common man finds it difficult to avail loans from banks and on the other hand rich businessmen easily avail credit and manage to escape the country without repaying them.
Former Central Information Commissioner Shailesh Gandhi admitted that there is a nexus between bank officials and Nirav Modi. He said, “This is almost a repeat of the Harshad Mehta scam where certain papers were issued by banks which could be encashed in other banks with no money or security against it. When the core banking system is in place, such fraud should not have occurred.”
He said that, even though there might be some flaws in the core banking system but auditors have failed to discharge their duties amicably. “This is a wake-up call and if we don’t act now, then every three months we will see a new Mallya or Modi fraud incident. The government must take steps to avert the recurrence of such incidents,” he added.
Despite sending 42 FIRs against Modi to PMO since July 26, 2016, he was present with the Prime Minister at the World Economic Forum held in Davos last month. Punjab National Bank filed complaint against Modi alleging fraudulent transactions worth about Rs 11,400 crore. According to reports, PNB had fraudulently issued “Letter of Undertaking” to Modi and associates and it was encashed overseas by them from different banks. Two junior employees of PNB’s Brady House branch Mumbai had fraudulently helped firms belonging to Modi group to obtain “Letters of Undertaking” without having sanctioned credit limit.
RTI activist Anil Galgali said that the government must extradite Modi and take action against him. “Banks many times don’t come under the purview of RTI Act and hence people remain unaware about the truth. They must be exposed for offering loans to bogus beneficiaries. Many times information is not provided by institutions citing confidentiality reasons,” he said.
Galgali wants the government to conduct audit of banks to know whom they have granted loans. “Banks must prepare a mechanism where they should provide the details of loans offered by them to customers online. Directors, Chairman and the Management of the bank should also be made accountable if customers fail to repay the loans,” he added.
After fraudulently issuing the first LoU in 2011, more than 150 of them were issued. Even though the LoU expires in 90-180 days but bank officials had extended their validity after each expiry. As a result of this, the fraud remained undetected for more than seven years.
Vishwas Utagi, Vice President All India Bank Employees Association demanded a detailed probe into this incident to bring the accused to book. He said, “Clients require Letter of Undertaking to do this business as their counterparts are abroad. They take the letter of undertaking from banks and avail buyer’s credit facility. An official named Shetty who is now absconding used to issue fake letter of undertaking to Nirav Modi for several years. The money was transferred from the Punjab National Bank Brady’s branch to various accounts of different branches located overseas.”
“The money was transferred through Society for Worldwide Interbank Financial Telecommunication or SWIFT but no records were maintained in the bank’s system. There was negligence on the part of officials of PNB and RBI to detect this fraud. The government must be held responsible for allowing Modi to escape,” he added.
Modi is already being investigated by the CBI for alleged cheating and fraud involving Rs 280 crore at a PNB branch. The investigating agency had sought the assistance of Interpol to locate Modi and his family after they fled from the country in the first week of January.