PNB fraud: SFIO may question auditors of banks, companies involved

Serious Fraud Investigation Office is likely to begin questioning auditors of banks and companies that are involved in the PNB case. The investigating agency will also probe the diversion of funds in other sectors by Nirav Modi and Mehul Choksi, sources told Moneycontrol.

The bank has been under the scanner since it has disclosed that a fraud worth Rs 11,400 crore had allegedly been perpetrated by jeweller Nirav Modi and insiders at a Mumbai branch.

Serious Fraud Investigation Office (SFIO) feels that this case is purely failure on the part of auditors.

A senior official of SFIO told Moneycontrol: “We have started our initial work in this case. And our focus is to know how auditors were not able to identify Rs 11,400-crores liability in last 7-8 years.”

For latest updates in the PNB case, click here.

“SFIO director is also going to Mumbai to take stock of the situation in last week of February. And SFIO will investigate diversion of fund by Mehul Choksi and Nirav Modi companies also,” said another source.

Gitanjali group's audit committee is also under the scanner. A source told Moneycontrol, “The audit committee should have known the money flow in the company as these fake LOUs generate cash in the company's books”.

He added that Mehul choksi-promoted Gitanjali could be diverting money into real estate and stock market through benami transactions.

​A participant in the diamond market told Moneycontrol on condition of anonymity that Gitanjali has created several subsidiaries which are used for investing funds in real estate. Gitanjali Infratech, an arm of Gitanjali Gems, developed a real estate project in Borivali by the name of “Gitanjali heights”.

“Mehul Choksi created a company in the name of a low-grade employee for diverting money into stock market and rigged the stock of Gitanjali. Gitanjali has two broking firms also which were used for rigging in the stock market. Mehul Choksi was caught by SEBI in 2013 for price rigging in the company’s stock; final orders are yet to pass in that case,” said a former official of Gitanjali.

Also read: ED seizes Rs 94 cr assets, luxury cars of Nirav Modi, Mehul Choksi

Moneycontrol also learnt that Nirav Modi has diverted funds into art collection. So far investigation agencies have not looked into his expensive art – paintings and sculptors – collection which are missing.

The government, on Monday, ordered the SFIO to probe around 110 companies and 10 limited liability partnerships related to diamantaire Nirav Modi and his business associate Mehul Choksi in relation to the Rs 11,400-crore Punjab National Bank fraud.