Punjab National Bank Scam
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The Punjab National Bank (PNB) Fraud (2018) was a fraudulent letter of undertaking scheme worth ₹12,000 crore (US$1.4 billion) issued by the Punjab National Bank at its House branch in Fort, Mumbai, making the Punjab National Bank liable for the amount. The fraud was allegedly organised by jeweler and designer Nirav Modi. Nirav, his wife Ami Modi, his brother Nishal Modi, and his uncle Mehul Choksi, all partners of the firms M/s Diamond R US, M/s Solar Exports, and M/s Stellar Diamonds, along with PNB officials and employees and directors of Nirav Modi and Mehul Choksi's firms, have all been named in a charge sheet by the Central Bureau of Investigation (CBI). Nirav Modi and his family absconded in early 2018, days before the news of the scam broke in India.
India's Enforcement Directorate had begun to attach assets of the accused and was seeking immediate confiscation under the Fugitive Economic Offenders Ordinance. Nirav was on Interpol's wanted list for criminal conspiracy, criminal breach of trust, cheating and dishonesty including delivery of property, corruption and money laundering since February 2018. In March 2019, Nirav was arrested in central London by UK authorities.
The bank initially had said that two of its employees at the branch were involved in the scam. The bank's core banking system had been bypassed when the corrupt employees issued LoUs to overseas branches of other Indian banks, including Allahabad Bank, Axis Bank, and Union Bank of India, using the international financial communication system, SWIFT. The transactions were noticed by a new employee of the bank. The bank then complained to the CBI, which investigated the scam apart from the ED and the Reserve Bank of India. The CBI named key officials Usha Ananthasubramanian, former CEO of PNB, executive directors KV Brahmaji Rao and Sanjiv Sharan in a charge sheet, holding them responsible for failing to implement several circulars and caution notices issued by the RBI regarding the reconciliation of SWIFT messages and core banking systems.