India sacks two PNB executives for ‘failing to prevent’ $2b fraud

India has sacked two senior executives of state-run Punjab National Bank (PNB) for allegedly failing to prevent a $2 billion fraud, two sources with direct knowledge of the matter said on Sunday, nearly a year after the country’s biggest bank scam came to light.

The firing of the two executive directors, whom the federal police have accused of breaching central bank guidelines, is the first instance of sacking of the bank’s employees since it said that billionaire diamond jeweler Nirav Modi and his uncle had for years fraudulently raised billions of dollars in foreign credit by conspiring with staff at the bank.

Modi and his uncle Mehul Choksi, who left India before the fraud was discovered, have denied the accusations.

In a stock exchange filing late on Friday, the country’s second-biggest state bank said the government had removed K Veera Brahmaji Rao and Sanjiv Sharan “from the office of executive director” with immediate effect. The filing did not give a reason, Reuters reported.

The government then fired them because “they failed to use global payments network SWIFT to detect the fraud”, the sources said, declining to be identified because the reasons for the sacking have not been made public.

“They were not able to supervise and there was dereliction of duty on their part,” said one of the sources, a government official.

Phone calls to PNB Chief Executive Sunil Mehta as well as to Rao and Sharan went unanswered.

Shares of the 124-year-old bank have lost more than half their value since the fraud came to light.