PNB fraud case: CBI scrutinises India’s largest law firm

 New Delhi: India’s largest law firm, Cyril Amarchand Mangaldas or CAM, is being scrutinised by probe agencies after they seized documents related to the Rs 13,000 crore fraud at state-run Punjab National Bank from its premises in February, a lawyer representing the government and a police source said.

PNB in January alleged that billionaire diamond jeweller Nirav Modi and his uncle Mehul Choksi had for years fraudulently raised billions of dollars in foreign credit by conspiring with staff at the bank.

In mid-February, Nirav Modi’s aides packed cartons of documents at one of his diamond firm’s offices in Mumbai and sent them to CAM’s office nearby, from where police seized them within a week on February 21, a review of the Central Bureau of Investigation’s court filings and witness testimonies showed.

K. Raghavacharyulu, a prosecution lawyer in the Nirav Modi case, and two CBI sources who declined to be named, said Cyril Amarchand Mangaldas possessed documents detailing Modi’s dealings with PNB, even though the firm wasn’t representing the diamond magnate or his companies.

“Cyril Amarchand Mangaldas was not their attorney in the PNB fraud case, 100% sure…that’s why they could not cite attorney-client privilege,” Raghavacharyulu said, adding that his assessment was based on regular briefings he received from CBI investigating officers.

Cyril Amarchand Mangaldas declined to comment on the possibility of being charged or being named as a witness, and said the Reuters findings were “full of false and speculative statements”. It did not elaborate. The firm didn’t comment on why it possessed the documents seized by CBI. CBI’s spokesman, Abhishek Dayal, declined to comment for this article, saying the PNB fraud case was under investigation and it will not be appropriate to say anything at this stage.

What is PNB fraud case?

  • In January, PNB’s Brady House branch, less than a kilometre away from the swanky Nirav Modi diamond boutique in Kala Ghoda has become the epicentre of one of the largest banking fraud detected in the country. Billionaire jeweller Nirav Modi allegedly acquired fraudulent letters of undertaking from one of its branches for overseas credit from other Indian lenders.
  • The Enforcement Directorate (ED) conducted raids on jeweller Nirav Modi’s properties in Mumbai, Surat and Delhi. A case of money laundering was also lodged against Nirav Modi and others. In a statement issued to exchanges, Punjab National Bank said it has detected some fraudulent and unauthorised transactions (messages) in one of its branches in Mumbai, for the benefit of a few select account holders with their apparent connivance. PNB has suspended 10 officers over the Rs 11,400 crore scam and referred the matter to CBI for investigation.
  • The Punjab National Bank in a letter on February 12 warned the other banks by revealing the modus operandi used by bank officials of PNB’s Brady House branch. In the letter, PNB said, “It was found through SWIFT trail that one ‘junior level’ branch official unauthorisedly and fraudulently issued Letter of Undertakings (LoUs) on behalf of some companies belonging to Nirav Modi Group viz. Solar Exports, Stellar Diamonds and Diamond R US for availing buyers credit from overseas branches of Indian banks.”
  • The fraud, incidentally, was 49 times the net profit posted by PNB for quarter ending December 31, 2017 and more than twice the amount that PNB got under bank re-capitalisation plan.