Nirav Modi scam: ICAI sends notices to statutory auditors of PNB branch

Mumbai: The Institute of Chartered Accountants of India (ICAI) has sent notices to all statutory auditors of Punjab National Bank's Brady House branch, where the over Rs 13,000 crore scam involving Nirav Modi took place, to appear before its disciplinary board.

The chartered accountants' apex body has made a list of the statutory auditors of the Brady House branch during 2011-12 to 2016-17, and asked them to appear before its Board of Discipline. Statutory auditors are members of ICAI and are governed by the apex body.

"ICAI has issued notices to statutory auditors of the Brady House branch under the Chartered Account Act, 1949, to appear before Board of Discipline and offer an explanation," ICAI member S B Zaware told PTI.

Eight statutory auditors, who had audited the lender's Brady House branch in Mumbai during that period, have been issued notices. This is a primary investigation and the board wants to ascertain whether the auditors were at fault.

"At this point, we cannot say that statutory auditors are guilty. After the auditors appear before the Board and answer questions, is when we will be able to determine their role in the fraud, if any," Zaware added.

In February, this year, the second largest public sector bank PNB had detected fraudulent transactions at the Brady House branch. The biggest ever banking fraud of more than Rs 13,000 crore was allegedly committed by billionaire diamantaire Nirav Modi and his uncle Mehul Choksi in connivance with some PNB officials.

Following the disclosure of the fraud by PNB, ICAI had formed a high-level group to study systemic issues involved in the scam. The group, after completion of its study, will also suggest remedial measures for strengthening the banking system.

Zaware said the 10-member group had to seek government's intervention after PNB refused to co-operate with the panel in providing information required to complete its report.

PNB was issued a letter by Ministry of Corporate Affairs and Ministry of Finance to disclose information to the group. The high-powered group, however, is yet to get information from the bank, Zaware, who is also the convenor of the committee, said.

In its preliminary conclusions, based on available information, the panel found out all possible lapses on part of the lender. Lapses in corporate governance and concurrent audit work as well as failure to take sufficient precautionary measures are among the factors flagged by the high-level panel. The fraud is being investigated by multiple agencies, including CBI, SFIO and ED.