PNB fraud case: Exiled officer of Nirav Modi’s company in CBI custody
A special court here on Tuesday sent Subhash Shankar Parab, an aide of fugitive diamantaire Nirav Modi, to CBI custody till April 26 in the Rs 7,000-crore Punjab National Bank (PNB) fraud case. According to Central Bureau of Investigation (CBI) officials, Parab was deported to India from Cairo, Egypt earlier in the day.
He was Deputy General Manager (Finance) in Nirav Modi-owned firm Firestar Diamond. After his arrival in India in the morning, Parab was produced before Special CBI Judge VC Barde. Special prosecutor A Limousine, representing the central probe agency, sought their custody for 14 days.
The CBI told the court that Parab was the Deputy General Manager at Firestar since April 2015 and was looking after the banking related activities of three accused firms, Diamonds R US, Stellar Diamond and Solar Exports. Notably, he headed the Department of Banking Operations, which prepared applications for Letters of Undertaking (LoUs) along with supporting documents on his instructions, the CBI said.
Parab was aware that these three firms do not have any credit facilities with PNB and are not providing 100 per cent cash margin for issuance of LoUs. The central probe agency also claimed that he was instrumental in handling the financial affairs of six Hong Kong-based and 13 Dubai-based “dummy” companies created by Nirav Modi.
The CBI said that public sector bank PNB suffered a wrongful loss of Rs 6,498.20 crore due to issuance of fake LoUs and “circular transactions” through fake companies. The agency said Parab, who reported directly to Nirav Modi, “actively conspired” with other co-accused, including bank officials, to issue LoUs without following the bank’s guidelines.
The CBI told the court that in order to ascertain the “end use” of misappropriation of large amounts of public money by Nirav Modi and others absconding, Parab’s continued interrogation was required. Parab’s lawyer Reshma Mutha argued that he was only an employee of Modi’s firm, was not authorized to sign the LoUs and his role was only to prepare operational documents and deliver them to the bank.
After hearing both the sides, the court sent the accused to CBI custody till April 26. Nirav Modi and his uncle Mehul Choksi are accused of duping PNB of a total of Rs 13,000 crore using Letter of Undertaking (LoU) and foreign letter of credit. (FLCs) by bribing their officers at the Brady House branch in Mumbai.
A CBI team had gone to the Egyptian capital to bring back 50-year-old Parab, who was allegedly held illegally in a Cairo suburb by Modi’s men.
Officials said Parab is considered a key witness in the letter of undertaking submitted to PNB. India had issued an Interpol Red Notice against Parab to track down and bring him back. Soon after the scam came to light in 2018, Parab was one of the officials who went missing along with Modi’s family members and Choksi.
Officials said Indian officials had received information that Parab had been taken to Egypt by Nirav Modi’s men and India had expressed concern for his safety. After a lengthy diplomatic and legal process, the CBI managed to secure Parab’s “administrative extradition” or deportation, which could have exposed the country’s biggest banking scam.
Nirav Modi is lodged in a London jail after being repeatedly denied bail and opposing his extradition to India. Choksi had already taken citizenship of Antigua and Barbuda in 2017 using the Citizenship by Investment Program before fleeing India in the first week of January 2018. The CBI has accused PNB official Gokulnath Shetty, among others, of helping Modi and Choksi.
By misusing Society for Worldwide Interbank Financial Telecommunications (SWIFT), an international messaging system for banking and without subsequent entries in PNB’s internal software ‘Finacle’, messages for fraudulent LoUs were sent to foreign banks, thus Any scrutiny of the funds of the company was bypassed. Banks, according to investigators.
An LoU is a guarantee given by a bank to Indian banks having branches abroad for granting short-term loans to an applicant. In case of default, the bank issuing the LoU has to pay the liability. Modi and Choksi’s companies took loans from foreign banks on the basis of PNB’s LoUs but did not repay them, thus transferring the liability to PNB.
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