CVC Raised Alarm Over 'Irregularities' In Gem Trade 1 Year Before Nirav Modi's PNB Scam

| April 9 , 2018 , 09:30 IST

The massive Rs 12,700 crore scam of Punjab National Bank by jeweller Nirav Modi raised several questions on how a scam of such a large scale could have taken place without detection.

The Central Vigilance Commission (CVC), in its annual report has revealed that it had sounded an alarm over irregularities in the gems and jewellery sector one year before the Nirav Modi scam came to light.

According to the CVC's annual report for 2017, the Commission held a meeting with senior officials of the CBI and Enforcement Directorate and Chief Vigilance Officers of 10 banks, including PNB, on January 5, 2017 to discuss irregularities in the accounts of some jewellery firms.

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Although the specific Nirav Modi-Mehul Choksi case was not discussed, the meeting discussed several issues related to frauds by other jewellery firms and loopholes in the banking system as well as the frauds committed on banks by Jatin Mehta of Winsome group.

PNB was also one of lead banks having given loans to Mehta with an exposure of Rs 1,658 crore. Subsequently, Mehta fled the nation after taking loans totalling Rs 6,200 crore from various banks.

Senior government officials viewed that since PNB already became a victim of fraud in the case of Mehta one year previously, it should have checked its accounts connected to the jewellery sector, which may have prevented the Nirav Modi-Mehul Choksi scam, as well as their fleeing from the nation.

The massive scam was disclosed by the Punjab National Bank in mid-February 2018, but both Nirav Modi and Mehul Choksi had fled the nation by January 2018. Modi has been traced to Hong Kong and a provisional arrest warrant has been issued, but going by the example of absconder Vijay Mallya, extradition, especially in loan default cases is not an easy process.