PNB scam: Central agencies tighten screws; CBI makes first big arrest

The CBI made its first high-profile arrest in the Rs 11,400 crore alleged PNB scam today, taking into custody Vipul Ambani, President (Finance) of Nirav Modi's Firestar Diamond, officials said.
Vipul Ambani is a relative of the Ambani brothers Mukesh and Anil Ambani. The two brothers promote different companies that carry the Reliance name of the company founded by their father Dhirubhai.
The central government agencies probing the fraud have, however, not said the companies run by the two Ambani brothers, or they themselves, were linked to the alleged fraud.
As part of the multi-agency probe, an Executive Director and nine other senior officials of the Punjab National Bank (PNB) were today grilled by the CBI in connection with the "fraudulent" guarantees issued by the bank in favour of nephew-uncle jeweller duo Nirav Modi and Mehul Choksi.

Vipul Ambani, who was being questioned since Sunday, was arrested after the agency found him "non-cooperative" in taking forward the investigation, officials said.
Ambani was arrested with four other senior executives of Modi's and his uncle Mehul Choksi's companies in connection with the two FIRs registered by the CBI.

Ambani was arrested along with Kavita Mankikar, Executive Assistant and Arjun Patil, Senior Executive, Kapil Khandelwal, CFO, Nakshatra group and Gitanjali group and Niten Shahi, Manager, Gitanjali group.
Mankikar, an authorised signatory of three companies--Diamond R US, Stellar Diamond, Solar Exports--was listed as an accused in the first FIR registered by the CBI on January 31 in which Modi, his wife Ami, brother Nishal and uncle Choksi also figured as accused.

Ambani, Mankikar and Patil were arrested in connection with the first FIR,while Khandelwal and Shahi were taken into custody in the second that was registered against Choksi and his group companies.
The searches by the Enforcement Directorate continued for the sixth day today, with the agency chief Karnal Singh cancelling his scheduled visit to France to attend a meeting of global anti-money laundering agencies to personally monitor the probe.
"Assets worth Rs 10 crore were seized during searches at 13 premises linked to Modi and Choksi," an ED official said.
The CBI, meanwhile, produced three three PNB officials --Bechhu Tiwari, Yashwant Joshi and Praful Sawant--arrested yesterday before a special court which sent them to agency's custody till March 3.

It has emerged during their questioning so far that they were trying to shift the blame for the scam on their colleagues--Gokulnath Shetty (a retired official) and Manoj Kharat-- taken into custody earlier.
As part of the multi-agency probe, the team of over 110 officials from I-T department raided 20 premises linked to Gitanjali Gems promoter Choksi and firms associated with him in connection with a tax evasion case, official sources said.
They said the searches were conducted in Mumbai, Pune, Surat, Hyderabad, Bengaluru and few other cities against 13 companies linked to Choksi and the Gitanjali Gems.
A total of 20 premises were raided by a team of over 110 I-T sleuths, the sources said.

The department had recently attached bank accounts and other assets of Choksi and the Gitanjali group.
Choksi, his nephew Modi and others, are being investigated by multiple probe agencies after the fraud came to light following a complaint by the Punjab National Bank. The PNB claimed they cheated the state-run bank of Rs 11,400 crore with the involvement of a few employees of the bank.
The CBI has registered two cases involving Modi and Choksi. These relate to fraudulent issuance of 150 Letters of Undertaking (LoU) (a kind of bank guarantee) worth Rs 6,498 crore and 143 LoUs worth Rs 4,886 crore.

The ED has also registered two separate cases to probe money laundering allegations against Choksi and Modi.
An LoU is a guarantee which is given by the issuing bank to Indian banks having branches abroad to grant short-term credit to the applicant. In case of default, the bank issuing the LoU has to pay the liability to credit giving bank along with accruing interest.