PNB fraud: Senior Gitanjali Group executive appears in court, gets interim bail

MUMBAI: A special anti-money laundering court on Thursday granted interim bail to Gitanjali Group’s former top executive Sunil Varma, an accused in the ₹13,850 crore Punjab National Bank scam, after he appeared before for the first time, after being on the run for over six years.

Following his appearance, the Central Bureau of Investigation (CBI), which is also probing a case linked to the PNB scam, sought his custody, but the special court granted him temporary bail for two days.

The special court deferred the matter to Saturday after senior advocate Abad Ponda, representing Varma, objected to the plea for his custody remand, claiming that the agency did not arrest him and, therefore, it could not ask for his custody remand.

Varma, a former international business head of diamantaire Mehul Choksi’s Gitanjali Group, had been absconding since the scam came to light in 2018. However, Ponda pointed out that Varma had left the country in 2017, much before the FIR in the case was registered, and therefore, it cannot be said that he was absconding.

On February 15, 2018, the CBI registered an FIR against Choksi, his Gitanjali group of companies and several others, including officials of Punjab National Bank. The central agency’s investigation revealed that they caused a wrongful loss of around ₹7,080.86 Crore (USD 952.75 million) to the state-run bank through 165 unauthorised or fraudulent Letters of Undertakings (LoUs) and unauthorised or fraudulent amendments made in 58 Foreign Letters of Credit (FLC) against which 311 bills were discounted from January 2017 to May 2017.

Besides, the entities controlled by Choksi have also duped a consortium of banks to the tune of ₹5,100 crore. According to the CBI, these entities enjoyed a credit exposure from the consortium of 32 banks, which have reported outstanding balances concerning those entities of around ₹5,100 crore as of December 31, 2017.

The Enforcement Directorate (ED) has also taken up a money laundering investigation into the separate cases registered against Choksi and Modi. Varma, along with diamantaire Choksi and others, was the brain behind the scam at the bank and was instrumental in setting up shell companies, the ED has alleged.

Earlier this month, a special PMLA court had suspended the non-bailable warrant issued against Varma in the ED case. Another NBW was issued against him in July 2021 in the CBI case. In April, Varma had moved the Bombay high court seeking cancellation of his warrant in the CBI case. The court had cancelled the NBW issued against him and had directed him to surrender at the Trial court before 18th July 2024.

The special public prosecutor Limosin, representing the CBI, sought his remand to police custody for fourteen days, citing the magnitude of the crime and the nature of his offence. According to the prosecution, Varma allegedly established overseas dummy companies and controlled their activities at the behest of the main accused, Mehul Choksi, who is currently absconding. According to the SPP Limosin, Varma came to India on 16th July 2024, before which he was in the USA.

In a parallel fraud, Choksi’s nephew Nirav Modi has also duped Punjab National Bank of ₹6,805.24 crore, using a similar modus of fraudulent LoIs and FLCs. An investigation by the CBI revealed that between 2011 and 2017, in all 1,214 LoUs of USD 3,731,110,331 ( ₹23,780 crore) were fraudulently issued to Modi’s firms - Diamonds R US, Stellar Diamonds and Solar Exports, out of which 150 LoUs remained outstanding – totalling to ₹6,498.20 crore and resulting in loss of ₹6,805.24 crore to the nationalized bank.