PNB Fraud: Interpol Issues Red Corner Notice Against Mehul Choksi

Both Mehul Choksi and his nephew Nirav Modi are being probed by the ED and CBI in the alleged PNB fraud.

The Interpol has issued a Red Corner Notice against absconding billionaire Mehul Choksi, who is accused of cheating state-run Punjab National Bank to the tune of Rs 13,000 crore in alleged collusion with his nephew Nirav Modi, officials said on Thursday, 13 December.

Choksi, who escaped in the first week of January this year after he and his companies cheated the bank of Rs 7,000 crore, has become a citizen of Antigua.

He has appealed against the CBI's application seeking the RCN.

“The Interpol has issued a Red Corner Notice against Mehul Choksi on the request of the CBI,” CBI spokesperson Abhishek Dayal said.

Choksi alleged that the cases against him were a result of political conspiracy, sources said. He also raised questions on issues such as jail conditions in India, his personal safety and health, they said.

The matter went to a five-member Interpol committee’s court, called the Commission for Control of Files which cleared the RCN, sources said. A Red Corner Notice is a kind of international arrest warrant for fugitives where Interpol requests its member countries to arrest or detain them.

The PNB was allegedly cheated by fraudulently issued of Letters of Undertakings (LoUs) and Foreign Letters of Credit (FLCs).

The CBI has charge-sheeted both Nirav Modi and Choksi separately in the scam.

The CBI, in its charge sheets last month, alleged that Choksi swindled Rs 7,080.86 crore, making it the country's biggest banking scam at over Rs 13,000 crore.

Nirav Modi allegedly siphoned Rs 6,000 crore.

An additional loan default of over Rs 5,000 crore to Choksi's companies is also a matter of probe under the CBI.

It is alleged that Nirav Modi and Choksi, through their companies, availed credit from overseas branches of Indian banks using guarantees given through fraudulent LoUs and letters of credit which were not repaid bringing the liability on the state-run bank, officials said.

LoUs are guarantees given by an issuing bank to Indian banks having branches abroad to grant short-term credit to the applicant.

The instructions for transferring funds were allegedly issued by a bank employee, Gokulnath Shetty, using an international messaging system for banking called SWIFT platform and without making their subsequent entries in the PNB's internal banking software, thus bypassing scrutiny in the bank, officials said.