Mehul Choksi claims innocence in PNB fraud with open letter

In what has been dubbed the biggest fraud in the country's banking history, India's No.2 state-run lender PNB has accused two junior employees at a Mumbai branch of colluding with companies linked to billionaire jeweller Nirav Modi and his uncle, Mehul Choksi, to obtain fraudulent loans.

In the wake of Punjab National Bank releasing the details of the scam to the public and filing a case with the CBI, the Income-Tax department, Enforcement Directorate and the CBI have been conducting raids on assets connected to Nirav Modi and co-accused Mehul Choksi. PNB says the fraud began as early as 2011 and remained undetected as the staff did not enter the transactions into its core software after sending instructions to overseas banks using Swift. The attached assets include a farm house in Alibag, Solar Power Plant, 135 Acre land in Ahmednagar and residential & office properties in Mumbai and Pune.

"The passports of Modi and Choksi have been revoked by Indian External Affairs Ministry".

The properties, worth Rs 523.72 crore, were attached under the Prevention of Money Laundering Act.

The top brass of the bank is being questioned just three days after the CBI quizzed three dozen officials of the bank and arrested a bank general manager, in the case, including six, serving and retired, PNB officials, who are being confronted with the documents recovered in the searches.

Modi, who had a chain of boutique stores from NY to Beijing, and his uncle Mehul Choksi are both accused of perpetrating the biggest loan fraud in Indian banking history and are both out of the country. Both Modi and Choski are said to have left the country before the criminal cases were lodged against them.

"With recent false allegations levelled against me of defrauding the PNB Bank and media frenzy, the situation has gone grave, which is turning graver by the day", Choksi wrote in the letter sent to employees on Friday.

The fresh exposure provided Congress President Rahul Gandhi an opportunity to attack Prime Minister Narendra Modi, saying that like Vijay Mallya and Nirav Modi, these promoters have also disappeared while the government looked the other way.

Absconding diamond exporter Mehul Choksi's lawyer said he is in touch his client, but do know about his location. In a regulatory filing, Allahabad Bank said last week that it has an exposure of almost $366.87 million (Rs 2,374 crore).

  • Eleanor Harrison