Speaking to news agency ANI, Aggarwal said that the probe agencies would not be able to prove the charges against Nirav Modi in the court of law.
2) Fitch move hints at the possibility of PNB ratings downgrade:
"Like 2G Scam and Bofors matter, this case will also collapse. Agencies are making noises in the media but they will not be able to prove the charges in a court of law. I am sure Nirav Modi will not be found guilty," the lawyer said.
Like 2G Scam & Bofors matter this case will also collapse. Agencies are making noises in the media but they will not be able to prove the charges in a court of law. I am sure #NiravModi will not be found guilty: Vijay Aggarwal, Nirav Modi's lawyer to ANI (file pic) #PNBFraudCase pic.twitter.com/IHGzhMMIXJ
— ANI (@ANI) February 20, 2018
On Tuesday, US ratings agency Fitch placed PNB on 'Rating Watch Negative' (RWN)
, reflecting the possibility of a downgrade following the fraud.
The fraud has raised questions on both internal and external risk controls as well as the quality of management supervision considering that the fraud went undetected for several years, Fitch said. "Fitch Ratings has placed Punjab National Bank's (PNB) Viability Rating of 'bb' on Rating Watch Negative (RWN), following the large fraud reported by PNB," the US-based agency said in a statement.
The Viability Rating measures creditworthiness of a financial institution and reflects the likelihood of the entity to fail, as per Fitch. The RWN reflects the possibility of a downgrade of PNB's Viability Rating.
"Fitch will resolve the Rating Watch once more clarity emerges on the extent of control failures and the impact on PNB's financial position," it added. Stating that the fraud event has been a setback for the bank in its reputation and has had a capital market impact, Fitch said it will monitor PNB's full liability, potential recoveries and the extent of additional fresh capital from both internal and external sources to determine if the bank's financial position is no longer consistent with the current viability rating.
3) PNB's 'haste' to blame:
Nirav Modi, the alleged kingpin of the largest banking scam in the country's history, has said PNB's overzealous approach shut the doors on his ability to clear the dues
. "In the anxiety to recover your dues immediately, despite my offer, your actions have destroyed my brand and the business and have now restricted your ability to recover all the dues leaving a trail of unpaid debts," Modi said in his letter to banks.
4) Modi claims his companies owe only Rs 50 billion: Modi also said the dues were much less than what the bank has claimed
, and that his relatives booked in the cases filed by the central agencies had nothing to do with the operations of the firms under their scanner. In a letter Modi written on February 15-16 to the Punjab National Bank management, a copy of which was accessed by news agency PTI, Modi pegged the money his companies owed to the bank at under Rs 50 billion (Rs 5,000 crore).
PNB, the second-largest state-run bank, had, on February 14, informed the exchanges about detecting a $1.77-billion fraud at its Brady House branch in Mumbai, and named the firms led by Modi and his uncle Choksi's Gitanjali Group, and some other diamond and jewellery merchants, as suspects.
Central government agencies, the CBI and the Enforcement Directorate, have registered cases on the complaint by the bank, and launched nationwide searches on dozens of offices and residences of the alleged fraudsters. The bank has named Modi's brother, his American wife Ami, and uncle Choksi, besides some others, in the FIR.
"The erroneously cited liability resulted in a media frenzy which led to immediate search-and-seizure operations, and which in turn resulted in Firestar International and Firestar Diamond International effectively ceasing to be going concerns," his letter said.
5) Modi wants banks to pay his employees' salaries: Nirav Modi has asked the banks to pay salaries to the 2,200 employees working in those firms.
"I would request you to permit salaries for FIPL and FDIPL to be paid for the 2,200 employees from the balance lying in the current accounts. Our HR head will send you a breakup of the monthly salary," Modi, who left the country along with his family in the first week of January, before the alleged scam became public, wrote in the letter.
6) Modi wants to sell his firms: Nirav Modi requested banks to allow him to sell the Firestar group
. "Even after your complaint was filed, in good faith I wrote to you saying please sell/allow me to sell Firestar Group, or their valuable assets, and recover the dues not just from Firestar Group, but also from the three firms," Modi's letter said.
He said the inventory, including assets and receivables of FIPL and FDIPL and three other firms could have settled the pending dues to the banks
. "However, now that stage appears to have passed, and there is a general panic," he said, adding that the valuation of the firms stood at Rs 65 billion.
He said that money went through PNB all these years for the repayments of the advances given by the overseas bank branches under the buyer's credit.
"That Firestar International and Firestar Diamond International have never been in default to any bank, and the bankers are fully secured". He also said that PNB had over the years been earning bank charges to the tune of billions of rupees
on the buyer's credit facility extended by the bank to the three partnership firms. He added that PNB had extended the money to the firm's buyers as well, from where also it has been receiving full payments, with interest and on time, all these years.
"Under the Banking Regulation Act, the RBI has a major role related to inspection, regulation, audit and the oversight of banks. We have written to the RBI, asking how the alleged scam, which had been going on for years, went undetected, and whether the regulator exercised its role under the law," an official said on condition of anonymity.
9) Three more PNB officials arrested:
The CBI on Monday arrested three more PNB officials after intense grilling
during the day in connection with the scam involving billionaire jewellery merchants Nirav Modi and Mehul Choksi, officials said. The agency also started searches late Monday evening at group offices of Nirav Modi at Peninsula Business Park in lower Parel, Mumbai.
The total number of arrests by the CBI has risen to five -- four PNB officials and a retired employee of the bank -- after Monday's development.
Manoj Kharat, a single-window operator at PNB, and the retired employee Gokulnath Shetty were arrested earlier.
Bechhu Tiwari, the then chief manager in the forex department; Yashwant Joshi, Scale-II manager in the forex department; and Praful Sawant, Scale-I officer handling the exports section were arrested by the agency Monday evening, officials said. The agency had started searches at their residences located in Navi Mumbai, Andheri and Dombivilli, they said.
A senior banker disputed the claim made by PNB that the fraud went undetected because the bank's core banking system (CBS) was not integrated with the Society for Worldwide Inter-Bank Financial Telecommunication (SWIFT), a global financial messaging system that was used to instruct foreign branches of Indian banks to release money, amounting to Rs 114 billion over the years, for companies owned by Nirav Modi and Mehul Choksi. The executive also said all the LoUs issued by PNB were genuine and in accordance with norms set out by the RBI.
"Once our foreign branches transferred the money to the PNB's nostro account how can it claim that the transaction was not recorded in its books? It should reflect in its accounts," the banker said on condition of anonymity.