Eyes wide shut | How the $1.8-billion PNB fraud went unnoticed
The Punjab National Bank branch in south Mumbai sits just down the road from both the Bombay Stock Exchange and the Reserve Bank of India, at a physical centre of one of the world’s fastest growing major economies.
The branch, clad in a stately colonial edifice, is now also at the heart of a fraud case linked to billionaire jeweller Nirav Modi that has shaken confidence in a state banking sector that accounts for some 70 per cent of India’s banking assets.
It was here, according to accounts from Punjab National Bank executives and government investigators, that a lone middle-aged manager, later aided by his young subordinate, engineered fraudulent transactions totalling about $1.8 billion from 2011 to 2017.
The bank says it is still investigating how they were able to do so and go undetected for so long. The accounts given by current and former executives who spoke to Reuters suggest an answer as simple as it is alarming: no one was paying attention.
The still unravelling story of how the fraud happened – which includes the alleged misuse of the SWIFT interbank messaging system and incomplete ledger entries – points to a breakdown in checks and balances, and standard banking practices, they …read more