Scam-hit Punjab National Bank (PNB) today asked billionaire diamond jeweller Nirav Modi to come up with a concrete and implementable plan to settle the loss caused to it by fraudulent issuance of Letter of Undertakings (LoU) through one of its branches.
PNB said this in its response to a mail written by Nirav Modi, who allegedly cheated the bank of Rs 11,400 crore in connivance with a few bank officials.
"You were getting LoUs issued illegally and in an unauthorized way through few bank officials. At no stage such facilities were extended by our bank to your three partner firms," sources said citing mail response sent by PNB General Manager (international banking division) Ashwini Vats to Nirav Modi.
When the illegal activities of Nirav Modi surfaced, the bank brought them to the notice of the law enforcement agencies as they apparently violated FEMA and anti-money laundering law, sources said.
"Your commitment and undertaking for sparing of the total liability was not backed by providing upfront amounts and timelines. However, should you have any concrete and implementable plan, do revert back,” the mail said.
Also Read: PNB fraud case: Enforcement Directorate seizes Nirav Modi's 9 luxury cars; freezes shares, mutual funds worth Rs 94 crore
Nirav Modi in his letter to the bank had said that the over-zealousness on the part of the bank to deal with the issue destroyed his jewellery brand and also jeopardised his ability to clear the dues.
"The erroneously cited liability resulted in a media frenzy which led to immediate search and seizure of operations, and which in turn resulted in Firestar International and Firestar Diamond International effectively ceasing to be going-concerns... This thereby jeopardised our ability to discharge the dues of the group to the banks.
"In the anxiety to recover your dues immediately, despite my offer (on February 13, a day before the public announcement, and on 15, your actions have destroyed my brand and the business and have now restricted your ability to recover all the dues leaving a trail of unpaid debts," Modi said in its letter to the bank.
The Rs 11,400 crore fraud perpetuated by Modi is being investigated by various investigative agencies including the Enforcement Directorate and the CBI.
PNB trashes Nirav Modi's allegations, says following 'lawful avenues'
Responding to Nirav Modi’s letter to the Punjab National Bank saying that the latter closed all options to recover their dues by going public with the matter, the scam-hit bank today strongly refuted the claims by the billionaire jeweller and assured following “lawful avenues”.
“Nirav Modi said PNB closed all options to recover dues by going public. However, we have followed lawful avenues available to us as per law of land to recover our dues,” the company secretary Balbir Singh said in a statement.
The bank, while responding to a query regarding the quantum amount of fraud, said the total amount was Rs. 11,394.02 crore, which was notified to relevant authorities on February 13 itself.
“On February 5, we, on the basis of the preliminary investigation report, informed simultaneously to our Board as well as to the BSE and NSE of initial fraud case of Rs. 280.70 crore. Upon receiving further investigation report enhancing the fraud amount to Rs. 11,394.02 crore or USD 1.77 billion, the Reserve Bank of India (RBI), and Central Bureau of Investigation (CBI) were informed in the evening of February 13. Information was also sent to the BSE and NSE on February 14,” the statement said.
Responding to an allegation of the bank having failed to report the filing of an FIR with the CBI at the occurrence of the event, PNB clarified that since law enforcing agencies were assigned to investigate the matter, any news in public would have alerted the fraudster, thus affecting recovery.
The PNB also assured that enough assets/capital was available “to meet any liability which is decided as per law.”
Responding to the arrest of three PNB employees by the CBI, the bank said a written reply from the Disciplinary Authority is awaited.
For the unversed, PNB last week detected a 1.77 billion dollar scam in which noted jeweller Nirav Modi had acquired fraudulent letters of undertaking from one of its branches for overseas credit from other Indian lenders.
Meanwhile, the CBI and Enforcement Directorate (ED) are conducting interrogation and raids of various people and places linked with the aforementioned scam.