'Divest powers of accused,' Finance Ministry directs PNB, Allahabad bank

Posted May 15, 2018

The Central Bureau of Investigation (CBI) is going to submit the first chargesheet today against Nirav Modi and his uncle Mehul Choksi in relation to the Punjab National Bank fraud case.

Similar action is likely to be taken by the board of Allahabad Bank against its CEO and MD Ananthasubramanian, who was the Managing Director of PNB till May 5 a year ago.

The Allahabad Bank has called for a board meeting to decide the fate of its top serving executive following the CBI charge sheet naming her in the Nirav Modi scam. Both Modi and Choksi had left the country before PNB filed the complaint with the CBI.

"The PNB board has chose to divest EDs of the functional and financial responsibilities and have also requested the Government to replace them", Kumar said, adding the Government is committed to taking strict action against erring officials.

The stock exchanges had asked a query from the bank asking if its CEO was charged by CBI in the PNB fraud. Most of the accused are common to these cases.

The CBI said the charge sheet was filed after an investigation into allegations of a fraud of about 65 billion rupees ($962 million) at PNB, which forms a part of a broader $2 billion fraud probe. The second and third FIRs focus on Choksi, Gitanjali Gems and others. The first arrest was made by the agency on February 17 that included the alleged key accused Gokulnath Shetty (former deputy General manager of PNB), Manoj Kharat (single window operator of PNB) and Hemant Bhat (authorised signatory of Modi's company). All of them will be named in the chargesheet. The chargesheet detailed the alleged role of PNB's former chief Ananthasubramanian in the scam. As mentioned earlier, the chargesheet goes on to mention how LoUs were used by Modi's firms to channel money - acquired via guarantees - to offshore companies.

Investigators found that the funds were siphoned off to purported overseas supplier firms that was a set-up by Nirav Modi and his firms.

A man reads a newspaper outside a branch of Punjab National Bank (PNB) in Ahmedabad, March 20, 2018. "Reconciliation of SWIFT (Society for Worldwide Inter-Bank Financial Telecommunication) messaging system CBS was not done despite repeated caution notices of the RBI", a CBI official said.