NEW DELHI: The CBI suspects the annual audit reports of the internal auditors of Punjab National Bank were suppressed by the top bank management leading to a delay in detection of the fraud involving diamantaires Nirav Modi and Mehul Choksi.
A senior CBI official said, “The audit reports had red-flagged certain inconsistencies in the account books but they were ignored by the top bank management as part of the common intention and criminal conspiracy. Had the audit reports been scrutinised properly, the scam relating to Modi and Choksi could have been detected much earlier.”
Ironically, the non-appraisal of the audit reports by the PNB management from 2012-13 to 2014-15 resulted in the bank’s chief vigilance officer (CVO) to be awarded the “best in vigilance” award.
The audits are done both internally and externally. The Reserve Bank of India, which conducts external audit of public sector banks every two years, also failed to notice the huge and fraudulent outflow of funds in foreign currency to the firms of fugitive diamantaires Modi and Choksi, sources said.
The internal audit is conducted both at the zonal and the headquarter levels. If the Mumbai zone of the bank ignored the audit reports of Brady House Branch, which is at the heart of `12,636-crore scam, the headquarters should have noticed the irregularities.
However, both the zonal and headquarters offices, too, failed to notice the irregularities — a pointer to the nexus at multiple levels, sources said.
The CBI also said that the inconsistencies in the audit reports were being probed. The agency has till now arrested a dozen functionaries of the bank including two auditors and officials of rank of general managers.
On Thursday, the CBI arrested the chief manager, internal chief auditor (retd), Bishnubrata Mishra, who was responsible for concurrent audit for the period 2011-2015 at PNB Brady House branch.
He was responsible for auditing the procedures and practices followed in the PNB branch and reporting them. Another internal chief auditor M K Sharma was earlier picked up by the agency in connection with the credit fraud case.