Delhi‑Delhi‑Mumbai Fracas: The 2‑Billion‑Dollar Bombshell
In a headline that could make you clutch your coffee mug, federal agents in India swooped on an internal auditor at Punjab National Bank’s (PNB) Mumbai branch. They claim he, along with some fellow sharks, engineered a US$2 billion (S$2.6 billion) white‑collar ripoff that has become the biggest “Banking Scandal” in the country’s history.
Who’s in the Hot Seat?
- Mohinder Kumar Sharma – the former chief auditor for the “Brady House” branch; caught in the act by the Central Bureau of Investigation (CBI) on March 1.
- Bishnubrata Mishra – ex‑manager who ran audits at the same branch (2011‑2015); now out of reach for the press.
- Other culprits: so far 14 arrests, eight from PNB itself and six from the jewelry empire of Nirav Modi and his uncle Mehul Choksi.
How It All Went Down
In PNB’s filing to a Mumbai court, inspector D. Damodaran described the whole scheme: Sharma “deliberately ignored” illegal letters of undertaking (LOUs) that were in the hands of companies owned by Modi and Choksi. These LOUs were the golden tickets, letting those firms snag loans from other state bank overseas branches from 2011‑2017.
Sharma’s lawyer, Apoorv Vijay Singh, told the court that his client didn’t even see the messages that swirled through SWIFT, the international payments powerhouse. “He didn’t have SWIFT access,” he said – a classic “no Wi‑Fi, no crime!” defense. (And yet the auditor in question was a senior employee at the very same branch where the forgery took place.)
Under the Magnifying Glass: A Two‑Toner Copy‑Paste Operation
PNB argues that two low‑level employees at the same branch were forging LOUs without putting them in the core banking software. Because of that loophole, the fraud slid under everyone’s radar for years.
Gov‑Talks: Auditing the Auditors
Finance Minister Arun Jaitley announced a bold move: a new independent regulator for auditors and a bill that would make it easier to seize assets from “fugitive economic offenders.” “We can’t allow people to make a mockery of the law,” he declared. Expect a wave of new rules starting next month.
Modi’s Newest Real Estate: From Bling to Bankruptcy
Firestar Diamond, a U.S. subsidiary of Modi’s jewelry empire, filed for creditor protection on February 26. And guess what? A New‑York bankruptcy docket showed potential buyers showing interest. The firm’s annual sales hovered around US$90 million (nice cash flow!). But a sting operation by federal agents snatched factories in India that made fine jewelry.
The corporate web is a nested loop: Firestar Diamond → Firestar Group → Synergies Corp. → Firestar Holdings (Hong Kong) → Firestar International (India). That’s one darker side of the solar‑system.
Choksi’s Rolodex: 41 Seized Properties
In a Thursday bomb‑shell, an Indian agency announced the seizure of 41 properties belonging to Choksi and his companies. The haul is valued at 12 billion rupees (S$243 million)— that’s a fat pile of steel‑and‑brick.
The Bank‑Consolidation Conspiracy
Pressured by criticism that the government can’t keep state banks (PSBs) from getting lost in their offshore maze, the Finance Ministry rolled out a “plug‑and‑play” plan:
- PSBs will hand over 35 overseas operations (branches, JV, subsidiaries, remittance centers).
- Another 69 operations are slated for later examination.
- The aim: tighten oversight, cut idle branches, avoid lax monitoring that fuels fraud.
Finance Ministry official Rajeev Kumar said, “PSBs to consolidate 35 overseas operations without hurting their international presence in those countries,” while hinting at the upcoming 69‑operation review.
Wrap‑up
These events are shaking up India’s banking scene. Auditors, managers, moguls, and overseas branches all caught on a web of wrongdoing. Stay tuned: ER moves to roll out tougher audit rules, and banks have got a new compliance “deadline” looming in the next 15 days.
