India’s biggest-ever bank fraud, the $2 billion fraud at the Punjab National Bank (PNB), involving jeweller Nirav Modi escaped detection because of widespread risk-control and monitoring lapses in many areas of the bank, the bank’s own internal probe has found.
A 162-page internal report, produced by PNB officials tasked with probing the fraud, lays bare lapses that go far beyond a few branch officers, according to Reuters.
The fraud was orchestrated by a few rogue employees, who issued fake bank guarantees from the Mumbai branch over several years to help two jewelry groups – controlled by Indian diamond magnate Nirav Modi and his uncle Mehul Choksi. They raised billions of dollars in foreign credit.
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The report, a copy of which was reviewed by Reuters, lays out how failings by 54 PNB officials – ranging from clerks to foreign exchange managers, and auditors to heads of regional offices, allowed the fraud to be perpetrated. Eight of the 54 are among those who have been charged by the federal police for their roles in the scandal.
The report, which the PNB officials presented to the bank’s fraud risk management arm on April 5, along with dozens of pages of annexed bank records and internal e-mails, is also part of the evidence submitted by the federal police in its court case against those allegedly involved in the fraud, said Reuters. The report’s findings have not previously been made public.
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