about 2 years ago
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BY Ruma Dubey

Today, anyone with the name ‘Nirav’ might be inviting guffaws and a look of scorn; as though it is the person’s fault that he shares his name with India’s biggest scamster till date.

The 162-page internal report of PNB says it all. The fraud was there to see but the typical attitude of Govt organisations, to flout norms and rules, blatantly doing away with all good practices; that’s what led to this scam. The PSU banks are so quick to show us, the customers, the rule book every time we question some meaningless rule; if only they had followed the rules….

The internal report is not a public document but Reuters managed to get hold of it and published some parts of it. We give you here excerpts from this report and you can see for yourself how easily Modi, obviously in connivance with PNB staff ran away with so much money. You read even some of it and the message which comes forth is that there was no way that the Brady House Mumbai branch staff did not notice the fraud being committed; they were all hand-in-glove.

  • Widespread risk-control and monitoring lapses by 54 employees, ranging from clerks to foreign exchange managers, and auditors to heads of regional offices in many areas of the bank.
  • Lapses within some of the bank’s critical areas at its New Delhi headquarters, such as its credit review and international banking units.
  • Despite a massive missing paper trail, none of the senior inspection officers, who conducted 10 visits between 2010 and 2017 to the branch, reported anything adverse.
  • Deputy manager Gokulnath Shetty for years issued fraudulent credit guarantees over the SWIFT interbank messaging network,
  • Shetty did not log his SWIFT transactions on the bank's internal software - the fraud could have been detected if the branch did the basic daily SWIFT reconciliation. This one activity would have nailed the whole act at the incipient stage.
  • The Mumbai city regional office received only two of the 12 monthly reports from the Brady House branch last year; yet the regional office signed off on a "false" compliance certificate, giving it a clean chit of health.
  • The biggest red flag – Brady House was a star performer only because of one account – Nirav Modi and Choksi. The branch’s import and export transactions in the 12 months to March 2017 stood at $3.3 billion, 50% higher than recorded two years prior. This exceptional growth should have been noticed.
  • In March 2012, an internal memo was issued that an almost 50% of the observations flagged in its annual inspection report - mainly auditor queries — remained "un replied/unattended to by respective concerned officers," calling it a "critical situation."
  • In 2016, the branch's assistant general manager issued an internal memo saying around 18 observations — five described as zero-tolerance level issues — were pending. The memo was signed by 10 bank officers, including Shetty.
  • Shetty authorized more than 1200 fraudulent credit guarantees. He was given unlimited approval powers – as a mid-level employee he should only have been able to approve transactions of up to 2.5 million rupees ($37,000) without sign-off from more senior officials.
  • Shetty used his personal Yahoo e-mail address to send 22 e-mails — 18 at around midnight — to reconcile large forex transactions involving the Modi group. The use of personal e-mail was "overlooked" by the bank's treasury department.

Under PNB policy, no officer should remain in the same office for more than three years, but Shetty retired after serving in Brady House for seven years. Three transfer orders were issued for him during his tenure, but he was never

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