1. PNB Fraud: What were auditors doing, asks Arun Jaitley as he raps bankers, CAs in Rs 11,400 crore case

PNB Fraud: What were auditors doing, asks Arun Jaitley as he raps bankers, CAs in Rs 11,400 crore case

Almost a week after the Rs 11,400 crore Nirav Modi case at the Punjab National Bank (PNB) became public knowledge, Finance Minister Arun Jaitley broke his silence and held auditors and bankers responsible for the scam.

By: | Updated: February 21, 2018 11:21 AM
What were auditors doing, asks Jaitley as he blames CAs, bankers in Rs 11,400 crore PNB case (Image: PTI)

Finance Minister Arun Jaitley finally broke his silence on the Rs 11,400 crore PNB case on Tuesday and rapped auditors and bankers for not identifying the wrongdoing — intentionally or unintentionally. “What our auditors were doing,” he asked at an event on Tuesday, nearly a week after the case became public knowledge.

“If both internal and external auditors really looked the other way, or failed to detect; then, I am sure the profession of Chartered Accountant itself, and those who control the discipline will introspect and look for legitimate actions that need to be taken,” the Finance Minister said.

He also pulled up bankers saying that they failed to use their authority in the effective and right manner and to check who among them were delinquents. “The question for the management itself is was it found lacking? The answer on the face of it seems — yes they were,” he added.

The PNB case came to light on February 14, when the bank in a filing on Bombay Stock Exchange (BSE) alleged that diamond czar Nirav Modi colluded with a former bank employee to obtain fake Letter of Understanding (LoU), which left them exposed to Rs 11,345 crore worth of credit. Other banks also have exposure in the case.

On Monday night, Nirav Modi communicated with the bank, saying that by making the issue public and the centre of media attention, PNB has closed all option of recovering its dues. The case was detected by the bank in the third week of January, while Nirav Modi was understood to have left the country at the beginning of the year.

The CBI booked Nirav Modi, his wife, brother and close aide Mehul Choksi on January 29. So far, a multi-agency probe has been started by the Central Bureau of Investigation and Enforcement Directorate (ED) and several arrests have been made.

Both agencies have conducted raids at various locations in different cities of the country and have claimed to have ceased jewellery, gold and diamonds worth Rs 5,000 crore. Meanwhile, the PNB’s 5-day market cap loss has exceeded the amount as its shares continued to fall for the fifth straight day.

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  1. P Kishore
    Feb 21, 2018 at 10:06 pm
    This is unfair, You should always understand the inhe limitations of an auditor. More over banks are also subject to RBI inspection. Why are you blaming only a chartered accountant and not RBI. It is the wilfull sjn committed by many bankers. In such case how a chartered accountant be responsible. Please blame our profession only after adequate investigation has been done.
    1. Raman Narasimhachariar
      Feb 21, 2018 at 5:01 pm
      auditors ought to have brought it to the notice share holders the present government being one of the major shareholders could have raise objection in the general body as they have major share holding they could stopped the proceedings this is equally applicable to previous U P A as the corrupt practice started and continued regime present N D F inherited the scam from U P A
      1. Venkatakrishnan Subramanian
        Feb 21, 2018 at 2:34 pm
        How about RBI ? As regulator they don't have responsibility for such huge default ? What about monitoring by RBI ?
        1. Lalit Agrawalla
          Feb 21, 2018 at 7:22 am
          The appointment of auditor is left in the hands of the Management for the last 6-7years and the Management does not appoint who didn't give reports suitable to the Management. Besides, the Audit has to be completed in 1 or 2 days at most, which is a very short time to even sign the volume of reports that are to be certified. Representation to RBI, FM was in vain. Now, RBI and FM should introspect about the full procedure from this year itself.

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