The CBI has set up a team to examine balance sheets and electronic data of Gitanjali group of companies and its India-based 18 subsidiaries headed by Mehul C. Choksi who is accused along with diamond merchant Nirav Modi in the multi-crore Punjab National Bank (PNB) fraud, officials privy to the case said on Sunday.
The move is a part of investigation to unearth the trail of the $754.92 million (Rs 4,886.72 crore) funds raised by the Gitanjali group through foreign branches of Indian banks against Foreign Letter of Credits (FLCs) or Letters of Undertaking (LoU) given by PNB.
The digital records and balance sheets running in thousand of documents linked to Gitanjali group of companies - indicating Gitanjali Gems Ltd raised $335.06 mllion (Rs 2,144.37 crore) through LoUs and $89.86 (Rs 575.11 crore) through FLCs; Gili India Ltd $88.54 million (Rs 566.65 crore) through LoUs and $97.72 million (Rs 625.40 crore) through FLCs; and Nakshatra Brands Ltd $50.17 million (Rs 321.10 crore) through LoUs and $93.57 million (Rs 598.85 crore) through FLCs -- are being examined, said the officials.
"The financial documents of 18 other subsidiaries of Gitanjali group are also under CBI scanner."
A dedicated Central Bureau of Investigation (CBI) team headed by a Deputy Inspector General level official is also in the process of getting details of financial documents linked to Diamond R Us, Solar Exports and Stellar diamond whose partners Nirav Modi, his brother Nishal Modi, uncle Mehul Choksi and wife Ami Nirav Modi have been named in the central agency's first FIR filed on Wednesday involving Rs 6,400 crore fraud.
The officials also continued examining arrested bank officials -- Gokulnath Shetty (retired) and Single Window Operator Manoj Kharat -- and Nirav Modi group's authorised signatory Hemand Bhat besides that of other six PNB officials to dig out money trail and the alleged scam.
They said the agency is also analysing records recovered from a huge server seized during searches after registration of the second FIR specially against Choksi for his involvement in Rs 4,886.72 crore fraud.
Asked about possible quid pro quo involved in the alleged scam perpetrated in collusion with Choksi, Nirav Modi and PNB officials, the CBI officials said it was yet to be decided and that it cannot be clearly said if there were regular payments or not.
According to the officials, the agency's initial focus is to understand the depth of the scam, the trail of funds and role of other senior PNB officials.
The total Rs 11,384 crore alleged scam surfaced when companies of Nirav Modi and Choksi approached the PNB's Brady road branch in Mumbai in January this year seeking LoU for payments to suppliers.
The official handling the case sought 100 per cent cash guarantee before any such letters could be issued to which the company officials said no such guarantee was sought in the past. The official checked the records which did not show such LoUs to Modi or Choksi's companies which led to suspicion.
It is alleged that the arrested PNB officials Shetty, for the last seven years, was bypassing core banking system of the bank and issuing LoUs fraudulently.
Shetty and Kharat sent messages of these LoUs using an international messaging system for banking systems called SWIFT (Society for Worldwide Interbank Financial Telecommunication) which is used to pass instructions among banks globally to transfer funds.
The LoU is a guarantee which is given by an issuing bank to Indian banks having branches abroad to grant a short-term credit to the applicant.
It is estimated that millions of messages are sent daily using the SWIFT technology globally wherein every member bank can send or receive messages of financial transactions to another bank worldwide.
The PNB officials sent these messages to Indian banks -- Canara Bank, State Bank of India, Bank of India, Axis Bank, Allahabad bank -- located in Antwerp, Hong Kong, Bahrain, Mauritius, Frankfurt without making entries in the banking software about the LoUs.
These LoUs and FLCs worth Rs 11,384 crore were getting renewed or issued afresh during last six years without coming in the notice of the bank. The Indian banks abroad did not mind as their money was safe (under guarantee from the PNB) and increasing because of accruing interest.
The party was spoiled in January this year when first renewal arose after the retirement of Shetty, the officials said. An alarmed bank dug out all such LoUs and FLCs showing a mammoth liability towards other banks.
The conniving officer issued FLCs by entering a smaller amount in trade finance module of Core Banking Solutions (CBS) system and generating the reference number and a SWIFT message was sent for the amount, the bank alleged. It said subsequently without making any changes in the module of the CBS, the conniving officer sent modified SWIFT message for enhanced amount under the same reference to the beneficiary bank.
The Indian bank branches which had credited money to Nostro accounts of PNB on receiving LoUs or FLCs, which were then withdrawn by Gitanjali group companies as buyers' credit, include: State Bank of India (Mauritius); State Bank of India (Frankfurt); Bank of India (Antwerp); Canara Bank (Bahrain); Axis Bank (Hong Kong); Allahabad Bank (Hong Kong); Union Bank of India (Hong Kong); and Uco Bank (Hong Kong).