ICAI issues notices to statutory auditors in Nirav Modi scam
What's the story
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. 13,000cr scam involving Nirav Modi took place, to appear before its disciplinary board.
Issued under the Chartered Account Act 1949, the notice asked all statutory auditors to appear before Board of Discipline and offer an explanation.
Here's more.
Information
ICAI issued notice to eight statutory auditors
The chartered accountants' apex body has made a list of eight statutory auditors of the PNB Brady House branch during 2011-12 to 2016-17. Statutory auditors are members of ICAI and are governed by the apex body.
Preliminary investigation
Primary investigation is to ascertain whether auditors were at fault
This is a primary investigation and the board wants to ascertain whether the auditors were at fault, said ICAI member SB Zaware.
"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.
Information
PNB detected Rs. 13,000cr fraud by Nirav Modi in February
In February this year, the PNB had detected fraudulent transactions at the Brady House branch. The biggest ever banking fraud of more than Rs. 13,000cr was allegedly committed by billionaire diamantaire Nirav Modi and his uncle Mehul Choksi in connivance with some PNB officials.
Scam
ICAI forms high-level group to study issues involved in scam
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 suggest remedial measures for strengthening the banking system.
Zaware said the 10-member group had to seek government's intervention after PNB refused to cooperate with the panel in providing information required to complete its report.
Lapses
Panel found possible lapses on PNB's part
The second largest public sector bank, PNB, was issuED a letter by Ministry of Corporate Affairs and Ministry of Finance to disclose information to the group.
In its preliminary conclusions, based on available information, the panel found out all possible lapses on part of the lender, Zaware said.
The fraud is being investigated by multiple agencies, including CBI, SFIO, and ED.