Nirav Modi scam: After India’s biggest banking fraud to the tune of Rs 11,400 crore involving billionaire diamond businessman Nirav Modi, Punjab National Bank (PNB) has appointed multinational firm PwC to probe the scam. We take a look at key audit areas.
Nirav Modi scam: After India’s biggest banking fraud to the tune of Rs 11,400 crore involving billionaire diamond businessman Nirav Modi in the country’s second largest lender, Punjab National Bank (PNB) has appointed multinational firm PwC (PricewaterhouseCoopers) to probe the scam, according to a report in The Economic Times. One among the ‘Big 4,’ PwC will be looking to trace the undisclosed assets of Nirav Modi and other accused in the scam. Notably, the Enforcement Directorate (ED) has so far seized gems, gold and other precious stones totalling to Rs 5,700 crore from companies and stores of the two prime accused ie, Nirav Modi and Mehul Choksi.
Apart from the undisclosed assets, PwC will also look to gather evidence which could in turn be used against the prime accused in court, the newspaper reported sources as saying. Meanwhile, Nirav Modi’s lawyer Vijay Aggarwal has denied reports claiming that Nirav Modi is absconding, and says that he has gone abroad on a business visit. Further, the lawyer maintains that a commercial transaction between Nirav Modi and Punjab National Bank is being projected as a fraud.
According to Aggarwal, the amount involved is much below Rs 11,400 crore. “The CBI itself has itself maintained that at the moment the amount is Rs 280 crore, which may go up to Rs 5,000 crore. I don’t know from where the media is getting the figure of Rs 11,400 crore,” Vinay Aggarwal told media reporters on Wednesday.
PwC will also conduct an investigation on Nirav Modi’s five group entities including Firestar Diamonds, Firestar International, Solar Export, Stellar diamonds and Diamonds R Us. After the scam broke out, bankers have reportedly turned cautious about the jewellery industry. The Federation of Indian Export Organisations (FIEO) said that it was important to treat it the scam as an independent case, and banks must refrain from knee-jerk reactions.
Yesterday, India’s apex body ICAI issued show-cause notices to the auditors of Punjab National Bank and Gitanjali Gems and has also summoned a senior PNB official seeking details about the fraud. Further, ICAI has also sought a list of the corporate borrowers of PSU banks which have an outstanding loan amount exceeding Rs 2,000 crore from RBI, according to PTI.