Seeks prosecution under Cr PC Section 197 and Section 19 Prevention of Corruption Act
Senior Bharatiya Janata Party (BJP) leader Subramanian Swamy has written to Arun Jaitley, the Finance Minister seeking sanction for prosecuting the current Finance Secretary Hasmukh Adhia. We at PGurus have written several articles about his role in allowing Mehul Choksi and Nirav Modi to flee the country by sitting on some incriminating reports of raids conducted by the Department of Revenue Intelligence (DRI) during Income tax searches in 2017[1].
On January 13, 2017, authorization was provided to search the premises/ assessees pertaining to the Nirav Modi group and the said authorization was executed on January 14, 2017. In total, 17 places were searched, out of which 15 pertain to Mumbai and one each in Delhi and Jaipur. The firms include Firestar Diamond, Firestar trading, Firestar International, Gitanjali Gems, Gitanjali Exports, Gitanjali Jewellery Retail, Gitanjali Brands etc.,
How exactly were Nirav Modi and Mehul Choksi ripping off Punjab National Bank? By using a bank facility called the Letter of Undertaking (LoU).
Nirav Modi and LOUs with PNB
There are many ways in which banks provide credit facilities to its customers. A due diligence process is undertaken, the size and capacity of the business to repay is computed and the limits are accordingly set. These limits are set in the Core Banking System (CBS) or a trade finance system. This covers all types of guarantees by the bank such as a Letter of Undertaking (LoU), a Bank Guarantee (BG) or a Letter of Credit (LC) facility[2].
In the normal course, When an LoU is issued normally in the CBS, the CBS makes a debit entry and then generates an LoU SWIFT (Society for Worldwide Interbank Financial Telecommunication) message that is then transmitted to the foreign entity. For more, see Figure 1.
But what really happened in the case of Punjab National Bank was that there was a manual entry of SWIFT message that was possible, which the SWIFT gateway provided. This method bypassed the use of the Core Banking System module. This means that the CBS does not have any knowledge of the LoU. So the corresponding debit for this entry in PNB’s CBS never got recorded. For more, see Figure 2.
Regrettably, this “shortcut” is used all too often in Indian banking to generate fake LoUs, LCs and BGs.
Adhia and Gold biscuits
On March 7, 2018, The Wire reported that Finance Secretary Adhia received Gold biscuits as Gift but failed to order probe[3]. Adhia admitted to the website that he got gold bars. But he cleverly said he don’t know who was the gift supplier. Mr. Adhia, who are you fooling? As a Government servant, you should have alerted the CBI or Delhi Police first and submitting to Toshakhana is totally illegal. Here you are trying to save the person who gifted gold bars.
In a letter to the Prime Minister, BJP leader Subramanian Swamy has alleged that the said gold bars, gifted to a senior Finance Ministry official by Nirav Modi, were deposited in the Toshakhana only because they were mistakenly opened by the servant in front of another IAS officer who had come to wish Diwali. However, Swamy did not name any official who received these doubtful gifts. As strange as it may sound, the Gold bars don’t find any entry in the Toshakhana records and the missing gold bars and the mystery man will come back to haunt Adhia in days to come.
A copy of the letter Dr. Swamy wrote to the Finance Minister is shown below:
References:
[1] Is Finance Secretary Hasmukh Adhia shielding PNB scamsters Nirav Modi and Mehul Choksi? Mar 21, 2018, PGurus.com
[2] Banking scam has UPA era roots – Feb 25, 2018, The Sunday Guardian
[3] Exclusive: Finance Secretary Received Gold Biscuits as Gift for Diwali But Failed to Order Probe – Mar 7, 2018, TheWire.com
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Hello Team PGurus!
I am curious to know what legal recourse is available if the sanction is not granted? Didn’t the Hon’ble Supreme Court in the matter of Subramanian Swamy vs. Manmohan Singh said that sanction u/s 197 CrPC is not required to prosecute a public servant for his/her criminal acts done in disguise of his duties?
I would like to hear more (a full article?) from you on the subject of sanction u/s 197 CrPC and Sec 19 PC Act.
Wait till Oct 4.
Please do upload a copy of the plaint after filing it in the court. Thanks in advance.
Awesome article, I loved to read so keep sharing and posting.
Dr Swamy again proves that He is The One Man Army Fighting against Corrupt.We all wish him all the Luck in his Endeavour.
Hope Mr Modi wakes up from his deep Slumber.
The Govt is going to face tough time from within due to their soft corner on errand officials during the election. They have not kept up the promise what they showered on public that they remove corruption. But Govt not punished anyone so far and public are watching carefully their actions.
Perhaps, some more skeletons from the the Finance Ministry/Bureaucracy closet may tumble out. Dr. S. Swamy should go aggressively after all those characters and drag them to court. Modi should deliver justice in a swift manner. No one is above the law.
Very interesting. As a developer of a CBS system, I can say that the corresponding entry will just not be a debit. Most will be opened as a secured loan (secured by goods or bills appraised) with repayment schedule and NPA tracking enabled. The guarantee will be revoked and collateral possessed if the customer defaults on the payment. The bank is just looking to earn the interest for the short term by extending this facility. Where was the collateral? Where were RBI and external auditors?
It would help understand the depth of the fraud committed by Neerav Modi in connivance with PNB officials,if a sample copy of the LOU (swift message -MT 760?) issued by the PNB is provided,if available.
Dear Mr. Iyer,
There seem to be missing sentences/parts in point 5 during the transition from page 1 to page 2. Page 1 abruptly ends with “.. Is Finance Secretary Hasmukh”. Page 2 abruptly begins with “March 7th 2018 in …”. Please convey the same to Dr. Swamy so that he can send a corrected version of the letter. Best wishes to you. Thanks and take care.
It is not consequential… the missing words may have referred to the date on which one of the articles appeared in PGurus.com (See Reference 1). Thanks for pointing it out. Printouts of both articles are accompanying the letter.
Brilliant piece of work…Please bring up in X news channel immediately