Mumbai: The special Prevention of Money Laundering Act (PMLA) court has granted bail to former deputy manager of the Punjab National Bank, Gokulnath Shetty, who was arrested by the Enforcement Directorate (ED) in connection with ₹13,850-crore fraud at the nationalized bank. However, he will not come out of jail, as he is also arrested in two separate cases registered against him by the Central Bureau of Investigation (CBI). One of them involves fugitive diamantaire Neerav Modi and the other involves his maternal uncle Mehul Choksi, also a diamond trader.
Special judge SM Menjoge ordered Shetty to be released on a personal bond of ₹2 lakh and one or two sureties in the same amount.
On January 31, 2018, CBI registered an offence against Nirav Modi and several others, including his firms for defrauding the public sector bank. The investigation by the central agency revealed that between 2011 and 2017, in all 1,214 Letters of Undertakings (LoUs) totalling ₹23,780 crore (approximately) were fraudulently issued from the Brady House branch of the PNB to Modi’s firms – Diamonds R US, Stellar Diamonds and Solar Exports, out of which 150 LoUs totalling to ₹6,498.20 crore remained outstanding, resulting in loss of ₹6,805.24 crore to the public sector bank.
A separate FIR is registered by CBI in connection with similar fraud committed by Choksi and his Gitanjali group.
The ED has also initiated two separate money laundering probes based on the CBI cases registered against the two. The agency arrested Shetty on April 5, 2018, in connection with the money laundering case involving Modi.
Shetty is accused of fraudulently clearing eight LoUs issued to Modi’s firms between February 9, 2017, and February 14, 2017. He was then working as deputy manager at the Brady House branch of the bank.
Shetty did it without following due procedure, approval of the authorities and without making entries in the core banking system to avoid detection of the transactions, transmitting SWIFT instructions to the overseas branches of Indian banks for raising buyer’s credit – enabling Modi’s firms to siphon off the money in the name of paying their exporters.
While seeking bail for Shetty, his counsel, advocate Sandeep Karnik, had primarily contended that the 65-year-old had already spent around 4-and-half years behind bars and thus spent over half of the maximum sentence of 7 years imprisonment prescribed for the offence of money laundering under the PMLA.
The court granted Shetty bail. The detailed order, however, has not yet become available.