Fraud of Rs 6,344 crore with PNB of Choksi firms

- Scammed with fake LOUs and FLCs

- LOUs and FLCs did not enter the central banking system due to collusion with PNB employees

CBI files supplementary chargesheet against Mehul Choksi three years after filing first chargesheet

New Delhi: Various firms of diamond trader Mehul Choksi have defrauded Punjab National Bank to the tune of Rs 4.5 crore. A CBI probe has revealed that he used fake Letters of Undertaking (LOU) and Foreign Letters of Credit for this. The CBI had submitted its findings in a supplementary indictment in a special court in Mumbai last week. The CBI said the scam was shaped by PNB employees in collaboration with Choksi and his company executives. PNB officials had issued 16 Letters of Undertakings (LOUs) and 4 Foreign Letters of Credit during March-April 2017 against the 211 bill.

These LOUs and FLCs were issued to Choksi firms without any sanctioned limits or cash margins and without entry into the central banking system of the bank to avoid any kind of scrutiny or verification in case of bankruptcy. The guarantee that a bank gives to a foreign customer on behalf of its customer is called LOU. Now if his client does not pay to the foreign bank his responsibility falls on the bank, as the bank is the guarantor.

The CBI, in its supplementary indictment, alleged that the PNB had to pay Rs 2.38 crore (૯૬ 2.81 crore) as the accused companies had not paid the fake LOUs and FLCs. It also includes interest arrears on this amount from foreign banks.

Foreign banks gave advanced credit to buyers on the basis of bogus LOUs and FLCs issued by PNB and discounted against bills.

The PNB has accused Choksi of embezzling Rs 2,050 crore. CBI officials said they were still investigating the case and once the LOUs were checked and the exact figures of the scam would be known only after the investigation was completed.

Earlier, 12 accused were named in the indictment. The other four accused have been named in the supplementary indictment. The second indictment names Sunil Verma, former international head of Gitanjali Group of Companies, two PNB officials, single window operator Sagar Sawant and AGM Sanjay Prasad, Gili under the group's auspices and Dhanesh Seth, director of Nakshatra brand.

The first indictment with Choksi and his firms was filed three years ago after a supplementary indictment was filed.