'Swift' mistakes that cost dear

To me it is case of system failure. It is strange that SWIFT messages could be made without getting into CBS system. In such a situation, frauds are likely to occur, not only in this Bank, but in other banks as well, where similar practices are followed. Also, a person not being rotated on a job for more than eight years is baffling and HR management of the Bank has to be held accountable for the same.

As things stand today, there is a need to look into accounts of all major jewellers, particularly what happened a few years back in the Winsome Diamonds case, and surprisingly PNB was involved in that case as well. 

Surprisingly, we do not hear about more than 5,000 crore fraud cases for reasons best known to banks, RBI and the government.

There is an urgent need to look at LOCs, LOUs and SBLCs, having been issued by banks over all these years and their misuse. Banks with foreign operations are more suspect to these practices. I would not be surprised if more skeletons come tumbling out of the cupboards.

As regards role of auditors, whereas one would like to sympathise with them for the difficult task that they face in view of LOCs/ LOUs having been issued out of the books, but unusual movements in Nostro accounts could have given them some reasons to look in to the matter deeply. But it is also a matter of fact that reconciliation of Nostro accounts is an ongoing process and even RBI inspectors and inspectors of banks who spend far greater time in branch compared to statutory auditors could not detect it. In my view, such a fraud could not have occurred without the connivance of at least six employees. The SWIFT message involves maker, checker and approver, and in case of large amounts, the foreign operation employee is supposed to get the transaction confirmed from an employee other than maker, checker or approver. So, it is not a straight-jacketed case. It needs to be investigated from various angles, particularly of money laundering.