PNB fraud case: CBI grills MD Sunil Mehta and ED KV Brahmaji Rao for the 1st time

The Central Bureau of Investigation questioned Punjab National Bank’s Managing Director Sunil Mehta and Executive Director KV Bhimjha Rao on Saturday. The is the first time the CBI has questioned the senior-most officials of PNB in the Rs 11,400 crore letter of undertaking facility fraud.

Last week, PNB informed stock exchanges about the Rs 11,400 crore worth of unauthorised transactions at its Brady House branch based on forged letters of undertaking (LoUs). The bank alleged that two of its officials had issued the forged LoUs, which allowed the Gitanjali group and Nirav Modi group of companies to borrow money from overseas banks, with PNB as the guarantor of the loans.

CBI is the second investigation agency after the Income Tax Department to have questioned Mehta. The latter grilled Mehta for two days at a stretch. A senior official told Moneycontrol: “CBI today questioned the MD and the ED who handles PNB’s finance department.” Another source in the department said, “The first day of questioning was based on answers of the arrested bank and company officials.”

A source from another investigation agency said that CBI has taken the right approach by first arresting the junior officers who were handling operations. “It is now focusing on the senior most officers of the bank. This approach will enable CBI to ask specific questions to the senior most officers.”

A senior official from the tax department said four officials are primarily responsible for the fraud: 1) ED finance, 2) board nominee from the Department of Financial Services, 3) The Chief Vigilance Officer of the bank, and 4) MD of the bank. “In this case, the MD had not even completed one-year in the bank. However, in this instance, ED finance KV Brahmaji Rao would be best suited to guide the investigation agency.”

In what may be a concern, the source stated that this the fraud may just be the tip of the iceberg and more such skeletons may emerge during the course of the investigation.