SEBI warns PNB over delay in making disclosures on fraudulent transactions related to Nirav Modi and Gitanjali Group

Mumbai, May 18: Securities and Exchange Board of India (SEBI) on Thursday warned the Punjab National Bank over a delay in making disclosures on fraudulent transactions related to Nirav Modi and Gitanjali Group of companies.

 

Notably, in the month of February, the Punjab National Bank reported that it has detected fraudulent and unauthorized transactions in one of its branches in Mumbai. The cumulative fraud amounts stand to Rs 13000 crores.

The market regulator SEBI in communication with the bank said, "The non-compliances are viewed seriously and PNB is hereby warned and advised to be cautious in future to ensure compliance with all applicable provisions of the SEBI Listing Obligations and Disclosure Requirements Regulations.”

SEBI’s warning letter has been posted by the bank on stock exchanges as part of the regulatory filing. SEBI also observed that there were delays of 1-6 days by PNB in making disclosures to the stock exchanges pertaining to the filing of reports/complaints with RBI and CBI.

The SEBI’s communication also referred to various disclosures made by PNB to stock exchanges during February and March this year regarding certain fraudulent transactions with respect to billionaire fraudster Nirav Modi group, Gitanjali group and others and referring of the same to law enforcement agencies.

On Wednesday this week, CBI filed a supplementary charge sheet against Mehul Choksi and his companies under Gitanjali Group in connection with Rs 13,000 crore Punjab National Bank (PNB) scam involving billionaire jeweler Nirav Modi.

Earlier, in the week, the CBI filed its first charge sheet detailing the alleged role of the bank's former chief Usha Ananthasubramanian. The CBI also named PNB executive directors K V Brahmaji Rao and Sanjiv Sharan, and general manager in its charge sheet. The probe agency in its first charge sheet has also detailed the roles of Nirav Modi, his brother Nishal Modi and Subhash Parab, an executive in Nirav Modi's company in the Rs 1300 crore mega scam.

The development comes nearly four months after the biggest fraudulent case hit Mumbai in the month of February where Punjab National Bank reported that it has detected fraudulent and unauthorized transactions in one of its branches in Mumbai. The cumulative fraud amounts stand to Rs 13000 crores.

After the scam was unveiled, the Enforcement Directorate registered an FIR under the Prevention of Money Laundering Act and conducted raids after the surfacing of the alleged fraud by billionaire diamond trader Nirav Modi and his Mumbai-based firms Diamonds R Us, Solar Exports and Stellar Diamonds.

On the other side, the CBI also registered FIRs against 10 directors of the Gitanjali Group of companies on charges of criminal conspiracy and cheating under the Indian Penal Code (IPC) and Prevention of Corruption Act, including Mehul Choksi, the Managing Director of Gitanjali Gems Ltd based in Mumbai's Walkeshwar. The FIR also named two former bank employees said to be directly involved in the fraudulent transactions.

Intensifying the probe, CBI sealed Brady House branch of Punjab National Bank in Mumbai from where the Rs 11,378.68 Crores PNB scam was originated. The action was based on EDs raid at over 45 more locations in 15 cities across India in connection with the multi-crore Punjab National Bank (PNB) scam.

In March, the Ministry of External Affairs confirmed that the fugitive offender Nirav Modi, who was involved in more than Rs 13,000 PNB scam is in Hong Kong. However, Indian authorities have already sought the provisional arrest of Nirav Modi to Hong Kong.

Importantly, Nirav Modi and his brother Nishal Modi left the country on 1st of January this year. Nirav Modi's wife, an American citizen, left India on 6 January while Mehul Choksi left the country on 4 January. CBI received a complaint from PNB on 29th Jan 2018and registered the case on 31st January.