New Delhi, Feb 16: Reeling under the $1.8 billion fraud blow, Sunil Mehta, MD and CEO of Punjab National Bank (PNB) on Thursday said the bank "will not spare anyone" involved in the crime, even as the main political parties started a blame game.
"We are known for clean banking. The fraud started in 2011. We have brought it under the notice of regulatory and law enforcement agencies as soon as we came to know about it. We will not spare anyone involved in the fraudulent practice," Mehta told reporters here in a hurriedly called press meet on Thursday.
Meanwhile, the Enforcement Directorate (ED) on Thursday launched nationwide raids on the offices, showrooms and workshops of billionaire diamond trader Nirav Modi in Mumbai, Surat (Gujarat) and New Delhi.
Nirav Modi, who was featured in Forbes India Rich List of 2013, was described by the magazine as a "third-generation diamantaire" who grew up in Belgium and after dropping out of Wharton moved to India in 1990 -- to eventually expand the "Nirav Modi" brandname to 16 stores in Delhi, Mumbai, New York, Hong Kong, London and Macau.
The Rs 11,515 crore fraud had been going on since 2011 at the Brady House branch of the bank but could only be detected on January 25 this year, the PNB chief said, adding that it was reported to the investigative agencies, including the Central Bureau of Investigation (CBI), on January 29.
"We have scanned all our branches also. This is a standalone case in one of our branches. There is nothing (such) in other branches," he added.
He said he had received a "vague email" from the customers involved in the fraudulent transaction about settling the dues and the bank had asked them to send their detailed response.
As for other banks, he said overseas branches of other Indian banks were affected by the transactions, except in one case. His answer was in response to a question whether any foreign bank branch was also affected.
"There is clear criminal connivance of the group companies of Nirav Modi and Gitanjali Gems with our branch official and also, apparently, with officials of overseas branches of Indian banks," the PNB said in a detailed note sent to 30 Indian nationalised banks, a private bank and a foreign bank.
A copy of the note is available with IANS.
The PNB virtually accused other banks' foreign branches of not sharing with it information or documents made available to them by these Indian companies at the time of availing buyers' credit from them.
The PNB chief said the finance ministry was taking stock of the matter on a day-to-day basis and would "come down heavily in support of booking the culprits".
"We have the capabilities and capacities to come out of the situation," he said.
"We are confident and committed to resolve the issue. We will honour all our bonafide commitments. We will not shirk our responsibilities," he added.
Regarding recovery of the amount, Mehta said: "We have already initiated the process. ED is also seizing the properties, seizing the current assets and we hope we will be able to recover good amount." According to reports, the ED had seized property worth over Rs 5,000 crore belonging to Modi and his family members.
Shares of PNB on Thursday continued to drop for the second consecutive day, closing almost 12 per cent lower, after having fallen 10 per cent the first day.
Talking about the modus operandi of the fraud in his letter to bank chiefs, Mehta said that the buyers' Credit availed against fraudulent letter of undertakings (LoUs) of the bank was used either to retire import bills or replenish the maturing credit of some other banks. The bank staff issued these LoUs on hahalf of companies belonging to Nirav Modi without routing them through PNB's core banking solution (CBS) system which tracks all bank transactions.
He further added that: "LoUs had not been converted into funded transaction so far, so it is a contingent liability... This matter we will decide after the completion of the investigation. If the investigation process says it is your liability, we will accept it.
The fraud saw a major fallout in the political arena. The Congress lashed out at Prime Minister Narendra Modi asking him to "come clean" on the government's failure to prevent the scam and identify those who helped the kingpin, Nirav Modi, to flee the country. Nirav Modi is said to have left the country on January 1 this year with other accused family members leaving within a week.
Posing a series of questions to the prime minister and his government, the Congress accused the PMO of not taking any action even after a complaint was filed with the prime minister's Office as early as July 26, 2016.
While implying that the fraud started when the Congress party was in power at the centre, the IT and Law Minister Ravi Shankar Prasad said the prime minister never spoke to Nirav Modi at the recently concluded World Economic Forum at Davos, as had been alleged.