Lapses led to PNB fraud: Internal probe
: A $2 billion fraud at Punjab National Bank (PNB) may have been orchestrated by a few rogue employees, but it escaped detection because of widespread risk-control and monitoring lapses in many areas of the bank, the bank’s own internal probe has found.
PNB, India’s second-biggest state-controlled lender, has previously alleged that a handful of staff at a single Mumbai branch issued fake bank guarantees over several years to help two jewellery groups controlled by diamond magnate Nirav Modi and his uncle Mehul Choksi raise billions of dollars in foreign credit and commit India’s biggest-ever bank fraud.
The bank’s CEO Sunil Mehta told Reuters in April that he had suspended 21 officials and “will not spare” others found involved in lapses, but he also described the fraud as a “small turmoil”.
However, 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.
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 authorities for their roles in the scandal.
MUMBAI/NEW DELHI