Nirav Modi & PNB Scam: A Case Study on failure of Ethics & Corporate Governance

Abstract

Case Introduction - In August 2018, Interpol – The International Criminal Police Organisation, an intergovernmental organisation which coordinates between 180 counties and the Government of India framed charges which are very serious in nature against Belgian tycoon Nirav Deepak Modi, who was being sought for illegitimate breach of trust, treachery and deceitfulness. The indictments comprised of acquisition of property in unlawful ways, felonious conspiracy, malpractice, money-laundering, misappropriation of public money, and multiple breach of contract.Commonly known as the Nirav Modi scam, it encompasses a massive USD 2 billion fraud, is a case of momentous financial transgression and banking deception. Nirav Modi, an Indian diamantaire, orchestrated one of the largest financial frauds in India, defrauding Punjab National Bank (PNB) of approximately INR 14,000 crore (USD 2.0 billion). The incident was uncovered in early 2018, comprised of a web of elaborate & complex financial transactions which were very shrewdly executed to avoid detection under the implicit consent of high-level officials. This episode of banking scam exposed severe lapses on the part of governing, controlling and monitoring authorities. This analysis dissects the circumstances which lead towards the colossal fraud, all actors in the play (some accountable directly and many indirectly), all relevant factors which influenced the case’s key elements. This study will assist us for a comprehensive understanding of the sequence of the events, the broad context of the fraud, the role played by persons who are involved. In a nutshell, it will answer the whats, the whys and lastly why the scam went on detected for a fairly long time.