The arrested deputy manager of Punjab National Bank (PNB) has told investigators that he had unauthorisedly obtained Level-5 password to the SWIFT system to authorise issuance of money through Letters of Undertaking (LoUs) and Foreign Letters of Credit (FLCs).
Gokulnath Shetty made the startling revelations when sleuths of Central Bureau of Investigation questioned him about the modus operandi of providing guarantee to other banks under the LoUs and issuance of enhanced FLCs.
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Shetty also informed the investigators that he shared the password with other individuals, essentially employees, as well as directors of Nirav Modi’s company.
The Level-5 password was the key allowing him to reach out to several banks to release the money to the Nirav Modi and Gitanjali groups through the SWIFT system, which, according to PNB amounted to a fraud of Rs 11,300 crore.
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SWIFT or Society for Worldwide Interbank Financial Telecommunication, with head office in Belgium, provides a network to enable financial institutions to send and receive information about financial transactions in a secure and standardised manner.
An LoU is a guarantee by the bank that should the borrower default on repayment, it would pay back the money to the original lender. An FLC is a sort of guarantee to a third part or vendor that money for the goods supplied would be paid.
Meanwhile, the CBI on Monday continued examining several PNB officials, besides questioning Vipul Ambani and Ravi Gupta, both Chief Financial Officers of diamond merchant Nirav Modi’s firms, in connection with the multi-crore bank fraud, an official said.
The CBI examined Ambani and 11 PNB officials to find out about the irregularities in fraudulent issuance of LoUs and FLCs in favour of companies of Nirav Modi and his uncle Mehul Choksi.
Vipul Ambani, son of Dhirubhai Ambani’s younger brother Natubhai Ambani, was also questioned by the CBI officials on Sunday for over eight hours in Mumbai. He is the CFO of Nirav Modi’s firm Firestar.
The agency has also sealed the bank’s second largest outlet -- Brady House Branch in Mumbai -- where the fraud had taken place.
While the CBI is scrutinising the details of LoUs and FLCs submitted by the PNB, the bank’s head office too has scrutinised the documents and submitted a report to the CBI.
The CBI’s move comes after the agency on Saturday arrested former PNB Deputy Manager Gokulnath Shetty, Single Window Operator Manoj Kharat and Nirav group’s authorised signatory Hemand Bhat.
The scam surfaced when officials of Nirav Modi and Mehul Choksi groups approached the PNB’s Brady House Branch in January to seek LoU for making payments to suppliers. Shetty had retired last May and the new PNB officials demanded margin money to issue the LoUs.
However, they were told by Nirav Modi group officials that they had been getting such a facility for years without margin. Once the PNB officials checked, the whole fraud unravelled.