The Institute of Chartered Accountants of India (ICAI) will now be investigating to see if auditors had a hand in perpetrating the 1.77 billion dollar transactional fraud at the Punjab National Bank.
The ICAI, which functions under Ministry of Corporate Affairs, has set up a committee to study what led to the fraud, and to suggest remedial measures.
The ICAI has also asked the Securities and Exchange Board of India (SEBI), PNB and federal investigating agencies to share their findings about the fraud. They are also to show any report that hints at involvement of chartered accountants.
Billionaire diamantaire Nirav Modi, with links to uncle Mehul Choksi, is in the eye of the storm regarding this fraud. It involved illegally issued letters of undertaking (LoU) from PNB that were used to get credit from overseas branches of other banks.
The fraud is said to have gone undetected as the SWIFT interbank messaging system used to transmit the LoU was not integrated with PNB’s core banking system (CBS).
So far, police have arrested at least a dozen people, six from the bank and six more from Modi’s and Choksi’s companies.