A Punjab National Bank (PNB) branch in Mumbai. (Source: PTI)

Nirav Modi - PNB Fraud: Audit Regulator ICAI Launches Investigation Into PNB Fraud, To Also Scrutinise All Big Borrowers

Accounting and audit regulator, the Institute of Chartered Accountants of India, has joined the fray of agencies investigating the Rs 11,400 crore fraud at Punjab National Bank allegedly perpetrated by jewelers Nirav Modi, Mehul Choksi - the founder of Gitanjali Gems Ltd., and entities related to them.

The Disciplinary Directorate of ICAI has written letters to market regulator Securities and Exchange Board of India, investigating agencies Central Bureau of Investigation and Enforcement Directorate and government-owned Punjab National Bank, asking for details regarding the alleged fraud “including the copies of the specific findings in respect of the involvement of any Chartered Accountant/firm of Chartered Accountants,” said the ICAI in a statement issued on Thursday evening.

Show cause notices have been issued to all auditors of PNB and Gitanjali Gems.

PNB’s Auditors
Chhajed & Doshi
R Devendra Kumar & Associates
Hem Sandeep & Co.
Suri & Co. SPMG & Co.

Gitanjali Gems’ Auditor
Ford, Rhodes, Parks & Co. LLP (term ended in August 2017)
M/s. Ambavat Jain & Associates LLP (appointed in 2017 till 2021-22)


Also Read:
The Nirav Modi Case: How The $1.8 Billion Fraud Detected At PNB Unfolded

ICAI said it has set up a “high power group” to study systemic issues in the PNB matter and suggest remedial measures. The group is scheduled to meet on Feb. 23.

The Institute has also asked the Reserve Bank of india, the central bank and banking regulator, to provide a list of corporate borrowers of all public sector banks who have an outstanding loan of Rs 2,000 crore or more. They will be examined by the Financial Reporting Review Board of ICAI for any possible violation of applicable standards of accounting as well as auditing, said the statement

Also Read: PNB-Nirav Modi Fraud: Understanding The Deceptively Low Risk World Of Buyer’s Credit

After disclosure of the alleged fraud earlier this month the ED and CBI have raided several properties connected to Nirav Modi and Mehul Choksi as also sealed the Brady House branch of PNB responsible for issuing fraudulent letters of credit or Letters of Understanding to the two businessmen and their companies. Several officials of PNB and the two companies have been arrested, though Modi and Choksi are reportedly not in India. Their passports have been suspended by the government.

The Income Tax Department is also pursuing the matter.