Page 20 - Bloomberg Businessweek July 2018

Bloomberg Businessweek
THE HEIST ISSUE

and Choksi’s companies over the previous seven years. the previous year and moved them to New York, telling
(Modi’s lawyer told Bloomberg News at the time that the friends her father was unwell. And the CBI revealed that
allegations were without merit. A PNB communications Modi and Choksi had left India in early January. (Modi’s
officer didn’t return phone calls and emails.) lawyer said his client had departed for business reasons.)
The bank claimed that two rogue Brady House employ- Once the scandal flared, whispers of their where-
ees, a deputy manager in the foreign exchange depart- abouts began filtering in like rare-bird sightings. They’d
ment named Gokulnath Shetty and a clerk named Manoj flown to Hong Kong, or had winged it to New York, or
Kharat, had connived with Modi, issuing the letters with- were roosting in London, the metropolis of choice for
out asking for collateral or documentation. Then, the bank absconding Indian billionaires. By the time the govern-
said, they’d refrained from updating the bank’s database, ment began seizing Modi’s properties—his diamonds, his
which would have flagged the credit as unapproved and Porsche Panamera, his Mumbai penthouse, his coastal
unsecured. Shetty and Kharat would likely have known— farmhouse—he’d melted from view.
as employees at every state-run bank would have known— In early February, his offices were raided by investi-
that the Swift messaging platform in these institutions gating agencies. A few days later, he sent an email from
wasn’t integrated with customer records and that, as a parts unknown to his staff. “The near future seems a lit-
result, the transfers wouldn’t trigger any warnings. This tle uncertain,” he wrote. His bank accounts all over the
was the vulnerability that invited the attack. world had been frozen. “We shall not be in a position to
The caper might have continued, the miss- pay your [salaries], and it would be right on your
ing sum growing plumper and plumper, part to look for other career opportunities,”
like a snowball rolling downhill, had he wrote. “I hope that we will be able to
Shetty not retired in the summer re- associate ourselves in better days.”
of 2017. When Modi’s companies Modi wrote to PNB as well, and the
approached PNB this January for letter leaked into the media. He urged
that last batch of letters, Shetty the bank “to be fair” and argued that

58 was no longer behind the counter. he ran “a legitimate luxury brand
It was an error, but Modi had loan business.” He owed the bank “sub-
payments due within weeks, so he stantially less” than $2 billion, he
might have needed the money. claimed, adding that after PNB had
The CBI hasn’t suggested what filed its first complaint, he’d offered
Modi and Choksi did with all the to sell his company to settle up. But
money they were accused of pilfer- the frenzy of publicity and investigation
ing. But Modi had big ambitions. Two peo- had sparked panic, he scolded the bank, and
ple with close knowledge of the process say now he wouldn’t have the necessary capital. “In
that, for the better part of last year, he was preparing to the anxiety to recover your dues immediately, despite my
take Firestar public. His company had hired two Big Four offer, your actions have destroyed my brand and the busi-
auditors and a trio of investment banks, and its staff had ness.” (No evidence of such an offer has emerged.)
worked to iron out the various audit irregularities, unre- Early in the investigation, the CBI arrested three
lated to the alleged bank fraud, that had wrinkled its books men: Shetty, Kharat, and Hemant Bhat, an authorized
over the years. “He wanted to grow his business, and to do signatory for Modi’s companies who’d applied for the
in five years what might otherwise have taken 20 years,” January letters of undertaking. In its three official com-
one of the men says. “If he’d gone public, maybe he could plaints, PNB had claimed that Shetty and Kharat were
have pledged his equity, raised some money, and finally the only bank officers involved, but everyone presumed
paid the bank back. Perhaps he would have done that.” more would be fingered. Shetty and Kharat weren’t
Or perhaps not. Once a man has gotten used to easy especially influential.
money, he often feels entitled to more. Anil Prabhu, a senior official of PNB’s employee union
who knows Kharat well, describes him as “a good boy,
ven as his companies were applying for new letters of a very soft-spoken boy.” Kharat had joined the bank
Eundertaking from PNB, Modi may have sensed the end in 2014, starting on a salary of $250 a month. He came
was imminent. According to the Mumbai Mirror, his wife, from a poor family in Karjat, a town near the city of
a U.S. citizen, had pulled their three children out of school Pune. “He was always talking about how he wanted to

July 2, 2018