Page 296 - A Banker Down the Rabbit Hole

SWIFT - Society of Worldwide Inter bank Financial Telecommunication,
is a system to send authenticated instant messages for funds transfer
abroad or for issue of Letter of Credit (LC) or LOU etc. Once a foreign
branch of an Indian bank gets the LOU via the SWIFT message, it
disburses the loan to the borrower.

When the foreign currency loan due was not paid in time, more LOUs
were issued on behalf of PNB to offset the earlier unpaid loan. When
the borrower did not repay the first Rs.800 crore, the bank ought to
have stepped in and booked a default by the company. Instead, the
two PNB employees, who were allegedly party to the fraud, issued more
LOUs on behalf of PNB, asking other banks to give out fresh foreign
currency loans to the firms.

According to the PNB complaint, the scam had been going on for about
seven years. This continued until two weeks before the whole operation
came to light on Jan. 05, 2018 and soon it was found that total LOUs
exceeded Rs12,700 crore.

Nirav Modi
Modi, 47, shot to fame in the past decade when he became the first
Indian to feature on the cover of a Christie's auction catalogue in 2010
for a Golconda diamond necklace that fetched $3.56 million at its
auction in Hong Kong. Born in India and raised in the Belgian city of
Antwerp, the diamond capital of the world, Modi is a third-generation
diamantaire. After dropping out of the University of Pennsylvania's
Wharton School, he joined the family business of his maternal uncle
Choksi at Gitanjali Gems. Choksi, director at Gitanjali Gems, is also one
of the accused in the ongoing CBI investigation. It was his initial nine
years at Gitanjali Gems in the 1990s that laid the foundation for Modi's
own jewellery business. Since 2010, Nirav Modi's fame only increased

A Banker down the Rabbit Hole | 293