"SCAM! It is a perfect acronym for 'Swindler Carted Away Money'. Folklore has it that the phrase scam came into the urban lexicon after an FBI operation called ABSCAM to track and nail the nexus between mobsters, dealers in fake securities, corporate fraudsters and politicos—one of whom was caught on camera spouting, “larceny is in my blood”. It all sounds so familiar. In fact, everything about the Rs11,000-crore-and-growing Nirav Modi scam fits pat into the acronym and the folklore. Here is a parvenu, or should that be an arriviste, who crafts an aura using diamonds as the commodity to pretend to own what is not his and yet acquire a spot on the Forbes Billionaires List.
What did Nirav Modi do? He got the Punjab National Bank to back him with letters of undertaking without any underlying asset or money to enter into a series of transactions, possibly incestuous, with related parties, and used the proceeds to build a giant bubble. And nobody was wiser – not PNB, not the counter-parties, not the auditors, not the Reserve Bank of India. Till this January, when the brazenness of an employee of his company encountered a conscientious bank executive.
Look at it again. What did Nirav Modi engineer? He systematically created a business model that was aligned between institutional incapacity, individual avarice, regulatory regression and patronage politics. Could all of this have been possible without influence and patronage? Shorn of technical details—the recording of LOUs, the linking of SWIFT to core banking, the reconciliation of commitments—Modi managed to corner public monies to fund private ambitions. And mind you this is the second largest public sector bank we are talking about."
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