It is unlikely that officials in the North block, which houses the Ministry of Finance and the Ministry of Corporate Affairs, was unaware of the Rs 11,400 crore plus fraud allegedly done by Nirav Modi and his maternal uncle Mehul Choksi in connivance with officials of the Punjab National Bank.
The Income Tax department in January last year had raided over 50 offices and residences of Nirav Modi for alleged tax evasion and alleged money laundering in the wake of the demonetisation move.
Sources said that these raids, conducted over three days across four cities—Mumbai, Delhi, Jaipur and Surat—had revealed alleged instances of massive tax evasion and suspected money laundering of old currency notes that were banned following demonetisation.
As part of the search operation that was carried out by the sleuths of the Income Tax department, all major firms operated by Modi and Choksi, including Gitanjali group and Firestar, were surveyed and documents, cash and jewellery were seized. However, no credible action was taken in the case.
Sources said that the I-T department had specially gathered incriminating documents from the SEZ units that Nirav Modi owns in Surat and had found documents that allegedly proved instances of bogus transaction that were carried out to move cash and evade tax. The documents that were gathered also included the groups’ exposure related to multiple banks, including PNB.
Sources said that in all probability the “matter” was “settled” at the bureaucratic level and Nirav Modi was allowed to continue his business without being questioned further.
This is also evident from the fact that it was only one year later (on 25 January 2018) that the fraud, which as per Punjab National Bank’s own admission began in 2011, was finally discovered by the Punjab National Bank and the case was finally registered by the CBI on 30 January.
Sources said that Nirav Modi, who has very comfortable relations with some senior officials of the Income Tax department and Ministry of Finance and with dozens of bank officials, is a “generous person” who takes “good care” of people around him.
Senior bank officials across other public sector banks with whom The Sunday Guardian spoke to said that the massive cover up, which went on for nearly eight years, is not possible without the active connivance of very senior bank officials.
Nirav Modi’s businesses were related to luxury goods and foreign remittances, and, in such areas, the banks use extra caution due to the high value of transactions involved.
“Every transaction in a bank passes through a chain of command; even a normal savings account that is opened has the approval of at least two officials, including one officer rank employee. To say that this scam was carried out by a couple of employees is baseless. Such high level transactions could not have missed the eye of the general manager and chief general manager level officers. The Punjab National Bank, by putting the blame on two junior employees, is only trying to make the weakest guy the fall guy,” a senior officer with a public bank said.