Punjab National Bank (PNB), which is hit by a Rs 12,636 crore fraud, has suspended its general manager in charge of international banking operations, Nehal Ahad, after he allegedly recalled internal auditors who were sent to the Dubai and Hong Kong branches of the bank.“The internal auditors submitted damaging reports on the functioning of the bank’s overseas branches. So they were recalled in six months’ time. An officer was suspended in the first week of March for doing this,” a source said.

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The PNB fraud is netting more officials who may have collaborated or overlooked the audit system, which led to diamantaire Nirav Modi and his uncle Mehul Choksi scooting away with nearly Rs 13,000 crore of bank credit.

PNB has already suspended 21 officials, proving it to be a systemic failure of auditing mechanism in the branches. Six officers have been arrested so far.

The officials arrested include Rajesh Jindal (who was the general manager of the Brady House branch in 2009-11), retired deputy manager Gokulnath Shetty, Manoj Kharat, PNB forex department chief manager Bechu Tiwary, Shetty’s supervisor and manager Yashwant Joshi, and former PNB auditors M K Sharma and Bishnubrata Mishra.

A detailed email questionnaire was sent to Sunil Mehta, chairman and managing director of Punjab National Bank, and to Brahmaji Rao, the executive director of the bank.

Messages were also sent on their mobile phones, but this did not elicit any response till the filing of this report.

PNB has only three overseas branches two in Hong Kong and one in Dubai. It also has a subsidiary in London that operates seven branches.

Another subsidiary in Bhutan, Druk PNB Ltd, has seven branches. The bank has one associate JSC Tengri Bank Kozhakhistan, with six branches. It also has representative offices in Shanghai, Sydney and Dhaka.

“There is an unholy nexus between the officers and circle head in select locations. Employees with procedure lapses are being booked by the vigilance department and the real culprits are not being booked,” alleged Anil Kaul, former PNB chief manager in Mumbai, who was also in charge of frauds and vigilance. 

While in service, he had asked the special task force to investigate the bank’s branch at Vashi, ECE branch in Delhi and the Brady House branch. His written complaints are yet to be taken up formally by any investigating agency.

In March 2016, Kaul had written a detailed letter on the rampant loan sanctions without proper checks and balances to the then deputy governor SS Mundra and the then PNB chairman and managing director Usha Ananthasubramanian, who has also been questioned by the investigating agencies in the Nirav Modi case.

Frauds have been rampant in PNB, India’s second-largest public sector bank. The finance ministry told Parliament last week that PNB lost Rs 2,800 crore to various frauds last fiscal year, making it the lender with the biggest losses through frauds. Even before the PNB fraud came to light, state-owned banks lost a total of Rs 19,533 crore through 2,718 cases of fraud in the fiscal ended March 31, 2017. PNB alone reported 158 cases of fraud in 2016-17, the ministry said.

Source: DNA Money