Published On: Sat, Feb 17th, 2018

PNB fraud scam: CBI arrests 2 officials and authorised signatory of Nirav Modi company

Mumbai: The Central Bureau of Investigation (CBI) arrested two officials at Punjab National Bank believed to be at the centre of a staggering Rs 11,400 crore fraud, the CBI source said on Saturday, in the first arrests so far in the country’s biggest-ever bank scam.

Top-Nirav Modi and bottom Gokulnath Shetty

The arrests late on Friday come amid an intensifying probe involving various authorities after India’s second-largest state-run lender said on Wednesday it had been hit by massive fraud.

The two bank officials who were arrested, Gokulnath Shetty and Manoj Kharat, are suspected of steering fraudulent loans to companies linked to billionaire jeweller Nirav Modi and to entities tied to jewellery retailer Gitanjali, which is led by Modi’s uncle, Mehul Choksi.

The accusations against the two relatively junior officials at PNB were detailed in the lender’s disclosure, and were also contained in a preliminary police report.

CBI also arrested a third person, Hemant Bhat, whom the source described as the “authorised signatory” of the companies tied to Nirav Modi.

All three are being questioned, and will appear in a Mumbai court later on Saturday, the source said, adding an “examination of others is continuing.”

The whereabouts of Modi, whose high-end jewellery has been worn by Hollywood stars including Kate Winslet, is unknown.

TV Station NDTV on Friday reported he was at a suite in a hotel in New York, citing household staff who answered the door.

The scale of the fraud has sparked a slew of probes into the lender, as well as into Modi, his uncle Choksi and companies affiliated to both.

The Income Tax Department has also extended a probe into Modi and his group companies, looking into possible tax evasion and suspected investment of illegal funds, a spokeswoman told Reuters on Saturday.

The spokeswoman said 29 properties and 105 bank accounts of Nirav Modi and his group companies had been seized.

The Hindu newspaper reported on Saturday that the Central Vigilance Commission, which investigations corruption in the government, has summoned senior officials of the Reserve Bank of India and the Finance Ministry to assess how all internal checks and balances failed to detect the fraud.

PNB officials were also summoned, the report said, citing an official aware of the development.

Inputs with Reuters

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