India federal police arrest auditor at PNB as investigation widens (updated)

Gitanjali Gems

28/02/2018 14:59

(Adds details) 
    NEW DELHI, Feb 28 (Reuters) - India's federal police on 
Wednesday arrested an auditor of a Punjab National Bank 
 PNBK.NS  branch at the centre of an alleged $2 billion fraud, a 
police spokesman said, bringing the number of bank employees 
held to seven as the investigation widens. 
    The Central Bureau of Investigation (CBI), however, has yet 
to track down billionaire jeweller Nirav Modi and his uncle 
Mehul Choksi, whose firms are accused of securing unauthorised 
loans using fraudulent letters of undertaking from India's 
second-biggest state lender.  urn:newsml:reuters.com:*:nD8N1PZ02C 
    Modi and Choksi left India in January before the fraud came 
to light. They have said in letters and statements that they are 
innocent. 
    CBI said the arrested auditor, M.K. Sharma, was "allegedly 
responsible for auditing the systems and practices" of Punjab 
National Bank's (PNB) Brady House branch in Mumbai and for 
reporting any problems to the zonal audit office. 
    Sharma will appear in a Mumbai court on Thursday, the 
spokesman added. Sharma could not immediately be reached for 
comment. 
    The agency earlier on Wednesday said that they have sent an 
email to Modi asking him to join the investigation by next week. 
It has already stepped up questioning of various present and 
past officials of PNB.  urn:newsml:reuters.com:*:nL4N1QH25Y 
    So far it has arrested at least 13 people - seven from the 
bank and six more from Modi and Choksi's companies. 
Investigators have also seized a number of properties from the 
two, including jewellery and luxury vehicles. 
    Modi and Choksi, owner of Gitanjali Gems Ltd  GTGM.NS , are 
suspected of colluding with bank officials at PNB to obtain 
unauthorised loans over a six-year period starting in 2011. 
    The scale of the fraud has raised concerns about the 
potential for similar cases across India's banking sector. 
India's Finance Ministry on Tuesday set a 15-day deadline for 
state banks to take action to improve their oversight of 
operational and technological risks. 
     
    EXPLAINER-How PNB says it fell victim to India's biggest 
loan fraud  urn:newsml:reuters.com:*:nL4N1QD4L8 
 
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GRAPHIC- India's $1.77 billion bank fraud IMG    http://tmsnrt.rs/2C9xTKf 
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 (Reporting by Krishna N. Das and Nigam Prusty 
Editing by Hugh Lawson) 
 ((Krishna.Das@tr.com; +91-98711-18314,  +91 11 4954 8026; 
Reuters Messaging: Krishna.Das.thomsonreuters.com@reuters.net, 
Twitter: https://twitter.com/krishnadas56)) 
 
Keywords: PUNJAB NATL BANK FRAUD/ARRESTS