PNB fraud: Arun Jaitley blames bank management, asks what were auditors doing

Finance Minister Arun Jaitley on Tuesday broke the silence over Rs 11,400 crore fraud at Punjab National Bank and blamed the management of the bank.

State-owned PNB has been rocked by the fraud involving billionaire diamond jeweler Nirav Modi who allegedly acquired fraudulent Letters of Undertaking (LoUs) from a branch in Mumbai to secure overseas credit from other Indian lenders. 

Without naming Punjab National Bank or the alleged kingpin of the scam Nirav Modi, Jaitley said bank management did not live up to their task as it failed to detect the delinquent.

"When authority is given to the management then they are expected to utilize authority effectively and in the right manner and therefore a question for management is if they were found lacking, on the face of it seems they were," said Finance Minister Arun Jaitley in his first remarks on the bank fraud.

The Finance Minister also questioned what the auditors were doing. "If both internal and external auditors have looked other way and failed to detect then I think CA professionals must introspect. 

"Auditors have to look inwards as to why they were unable to detect irregularities. Supervisory agencies should ensure the stray cases are nipped in the bud and they are never repeated," he added.

Jaitley also said that it is incumbent upon the state to chase those who cheat the banking system.

Last week, Congress President Rahul Gandhi had asked Prime Minister Narendra Modi and Finance Minister Arun Jaitley to speak up on the multi-crore PNB scam and not behave like "guilty".

"PM Modi tells kids how to pass exams for 2 hours, but won't speak for 2 mins on the 22,000 Crore banking scam. Mr Jaitley is in hiding. Stop behaving as if you're guilty! Speak up #ModiRobsIndia," he wrote on Twitter.

The Congress had on Thursday targeted Modi for the presence of Punjab National Bank fraud accused jewellery designer Nirav Modi in an Indian business delegation at the World Economic Forum in Davos.

The CBI has registered two FIRs — one on January 31 and another a few days ago — against Modi, his relative Mehul Choksi of Gitanjali Gems and others for allegedly defrauding PNB of about Rs 11,400 crore.

Central Vigilance Commissioner KV Chowdary also met senior officials of Punjab National Bank, Superintendent of Police of Bank Security and Fraud Cell of the Central Bureau of Investigation (CBI) in connection with the scam.

The anti-corruption watchdog CVC exercises superintendence over the CBI in corruption-related matters.