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'Nirav Modi-PNB fraud a familiar rerun, not the last'
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SME Times News Bureau | 25 Jun, 2019
The Rs 14,000 crore Nirav Modi-PNB scam is not the first and certainly
not the last despite elaborate checks prescribed by the regulators, says
a new book by B.V. Kumar, a former head of the Directorate of Revenue
(Intelligence) who was in the thick of the struggle against scamsters,
smugglers and underworld during his 35 years in the Indian Revenue
Service (IRS).
"The case of (diamantaire) Nirav Modi and the
Punjab National Bank has thrown up the issue of vulnerability of banks
to frauds. This was not the first case, tragically and unfortunately,
despite several such cases having been detected by the enforcement
agencies and even after all elaborate checks prescribed by regulators,
such frauds will continue and this will not be the last case," Kumar
writes in the exhaustive "DRI & The Dons - The Untold Stories
(Konark/pp 448/Rs 525).
"Nothing can prevent human ingenuity from
breaching those barriers in order to commit financial fraud," Kumar
writes, pointing to a similar case with international ramifications
detected by by DRI Mumbai that was "a pointer to many such frauds that
might have been committed and have gone undetected for many years".
That
fraud, detected in September 1998, involved Mumbai-based Hamco Mining
and Smelting Ltd and its associate companies remitting "huge amounts of
foreign exchange ostensibly against imports made by them - without
actually receiving the goods".
"Several rules, regulations,
checks and controls have since been put in place to prevent the
repetition of such frauds. Alas, the more things change, the more they
remain the same. Such frauds continue to this day. And enforcement
agencies continue to have their hands full," Kumar writes in the book
which was released here on Friday evening.
In the present
instance, then Finance Minister Arun Jaitley informed the Rajya Sabha in
March that Nirav Modi obtained his first fraudulent guarantee from PNB
on March 10, 2011 and another 1,212 such guarantees till May 23, 2017.
Nirav
Modi, his wife, his uncle Mehul Choksi and other members of the family
flew the coop in January just before the scandal broke. He has been
jailed in London and his fourth bail plea was rejected last week.
That's
one aspect of the book, which, through its 48 chapters, details the
DRI's attempts to counter the likes of Haji Mastan, Iqbal Mirchi, Dawood
Ibrahim, Vicky Goswami, Mustafa Dossa, Sukar Naran Bakhia, Alamzeb and a
host of others.
"An endeavour has been made to record some of
the most important cases detected by various DRI officers at great
personal sacrifice, sometimes even at the cost of their own personal
wellbeing and life. A few officers have been disabled and some of them
were shot or killed by anti-national elements," Kumar writes.
The book paints a grim picture of the scenario ahead.
Kumar
writes that with burgeoning inflation, widening balance of payment
deficit and a weak rupee against the dollar, the demands for goods of
conspicuous consumption - including gold, luxury goods and electronic
goods with the latest technology - would create its own supply.
The
tariff barriers raised by the Donald Trump administration and the
counter-measures by the Chinese and Indian governments will naturally
raise the cost of such goods and "create the required environment for
organised crime to enter the fray".
"It should also be kept in
mind that organised crime would take over all connected operations since
there is a close nexus between organised crime, economic crime, drug
trafficking, terrorist activity and money laundering - ultimately
resulting in subversion of the democratic political process," Kumar
writes.
Noting that banks and financial institutions "are a
vital link in facilitating international trade in goods and services",
he warns that they "are also vulnerable to organised crime, drug
traffickers, terrorists and white-collar criminals".
Thus, the
evolving scenario "needs a coordinated response from the law enforcement
agencies to combat organised crime. The political establishment should
also recognize that the law enforcement agencies should be well-equipped
for greater engagement to give a fitting response".
"For this,
their intelligence apparatus, should be upgraded and wherever necessary,
with the latest technological tools. It should also be remembered that
the effectiveness of any measures taken will succeed only when there is
political will and direction to combat this menace," the author
concludes.
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