The CBI has told the special court hearing the Rs 11,300 crore diamond frauds that Gokul Nath Shetty, a retired deputy manager of PNB who was arrested on Friday, had told the agency that issuing of letters of undertaking (LoUs) had been going on since 2008.
On Tuesday, the court delayed three PNB officials who were arrested on Monday – Bechu Tiwari (chief manager, in charge of forex department), Yashwant Joshi (Scale II manager of forex department) and Prafful Sawant (Scale I officer, export) – to police custody until March 3.
All five PNB officials arrested so far were component of the forex department at the bank’s Brady House branch at the time of the purported fraud.
After hearing submissions by the prosecution and the defence, special judge S R Tamboli said: “There is a probability of involvement of bank officers in diverting the money of the bank. The offence needs to be investigated and the investigating officer (IO) has to confront the accused with different documents.
The offence has a wide effect on the economy of the nation and therefore fair chance needs to be given to the IO for further investigation.” The FIR purported that Shetty and a single window operator (clerk), Manoj Kharat, during their forex department posting, fraudulently issued eight LoUs (which are a form of bank guarantee) equivalent to Rs 280 crore on February 9, 10 and 14, 2017, in favour of Allahabad Bank, Hong Kong, and Axis Bank, Hong Kong, without following prescribed method. It added that the funds raised for import bills were not utilised for such purposes in many cases. Shetty and Kharat, arrested last week, are presently in CBI custody until March 3.
During Tuesday’s proceedings, special CBI prosecutor A Limosin told the court that Tiwari, in his capacity as chief manager, was to monitor Shetty’s transactions. However, he said that during the 2015-17 period, Tiwari did not monitor the fraudulent and illegal LoUs issued by Shetty. The remand states that Tiwari issued three circulars on February 19, 2016, February 7 and March 14, 2017, supposedly for the sake of keeping a check on the LoUs sent through the SWIFT terminal of the bank, but neither followed it up nor took any steps to look why his instructions were not followed by Shetty, Joshi or Sawant. “His deliberate acts of omissions led to the continuance of concealment and big scale liabilities of PNB to the foreign banks,” the remand plea states. The plea said that the amount of fraudulent LoUs issued are likely to be in the vicinity of around Rs 6,000 crore, more than the Rs 280 crore reported by the bank in its complaint.
The CBI told the court that the trio did not cooperate with the investigations and shifted the whole blame on Shetty. The defence opposed their custody and said that the trio had helped in bringing the fraud to light. The defence said that Shetty, who is the perpetrator and who allegedly has issued the LoUs has not created any such chain which would make the manager or chief manager part of the plot.
Meanwhile, on Wednesday the court is likely to decide on a plea by arrested accused Hemant Bhatt, one of the directors in about 16 Nirav Modi companies, searching permission to have his counsel present along with him during his interrogation.