CBI fears paper trail may have been destroyed in PNB fraud

NEW DELHI: The CBI is yet to recover most documents related to the fraudulent letters of undertaking (LoUs)issued by Punjab National Bank (PNB) to companies controlled by jewellers Nirav Modi and Mehul Choksi, prime suspects in a fraud estimated at ₹12,600 crore. The agency suspects that some of the documents may have been destroyed.

LoUs are essentially bank guarantees that allow clients to raise credit from the foreign branches of other Indian banks.

Court documents seen by Hindustan Times show CBI on March 5 informed a Mumbai special court of the preliminary findings.

PNB alleged that companies connected to Modi and Choksi, his maternal uncle, committed a fraud of ₹12,600 crore in connivance with bank officials in the issuance of LoUs and Foreign Letters of Credit (FLC). All these LoUs and FLCs were issued by only one branch, located at Brady House in Mumbai.

CBI has arrested about 18 suspects, including PNB officials and executives of firms controlled by Modi and Choksi.

On Wednesday, it filed a third FIR in the case. In a submission to court, the agency pointed to a particular period between 2009 and 2011 for when documents related to LoUs could not be retrieved. It is likely they were “destroyed or removed”, it said. “Investigation conducted so far revealed that Sh Rajesh Jindal (one of the arrested suspects) was posted as branch manager, PNB Brady House branch, Mumbai during the period 2009-2011 and during his tenure he allowed Sh Gokulnath Shetty, Deputy Manager (another arrested suspect) to continue issuing LoUs without following existing banking procedures, policy guidelines of the bank and the RBI (Reserve Bank of India) guidelines.” “The documents in respect of the LoUs issued during this period are yet to be recovered as the bank (PNB) has mentioned that documents pertaining to LoUs are not available in the Branch and it is likely that he may have destroyed or removed the same,” CBI submitted before the special court.

CBI also told the court that the practice of illegal issuance of LoUs in the Brady House Branch had been going on since 2010.