The Rs 13,000-crore fraud at the Punjab National Bank involving billionaire businessman Nirav Modi was not detected because of widespread lapses in risk-control and monitoring, Reuters reported on Wednesday. The agency said it has reviewed a copy of the 162-page report of an internal investigation that was placed before the bank’s fraud risk management arm on April 5.
In April, the bank’s Chief Executive Officer Sunil Mehta told Reuters that he had suspended 21 officials and “will not spare” others found involved in lapses. However, he described the scam as a “small turmoil”.
But the report shows that people across the board – clerks to foreign exchange managers, and auditors to heads of regional offices – allowed the fraud to be perpetrated. As many as 54 individuals have been named, of whom eight have been arrested so far. The police have also submitted the report as evidence in court.
The report says that lapses at the credit review and international banking units at the bank’s New Delhi headquarters for several years was one of the reasons the fraud eventually went undetected. “There was enough evidence to suggest failures,” the team of four investigators said. “It was observed that blatant system violations/unethical practices/dereliction of responsibilities led bank to such a catastrophe.”
The Punjab National Bank did not respond to a question from Reuters about actions taken against the officials named in the report. However, an unidentified spokesperson reiterated Mehta’s statement: “We must reiterate that we will not spare anybody who is found guilty irrespective of the level or position in the bank.”
Buy an annual Scroll Membership to support independent journalism and get special benefits.
Our journalism is for everyone. But you can get special privileges by buying an annual Scroll Membership. Sign up today!