One of the largest branded jewellery retailers in the world is under investigation for letter of credit (L/C) fraud.

India's Central Bureau of Investigation (CBI) is looking into US$279 million of fraudulent L/Cs arranged by Punjab National Bank (PNB) for the Gitanjali Group.

SWIFT misuse

The case has been raised by PNB, which alerted the CBI that as well as suffering losses through L/C fraud, it has also lost US$456 million in transactions based on letters of understanding.

Investigators say that a bank official misused the SWIFT electronic messaging platform to benefit Gitanjali Group of companies in L/C transactions.

Bank complicity

"The conniving officer issued L/Cs by entering a smaller amount in trade finance module of [the bank's] system," according to the complaint submitted by PNB to the CBI.

It says that bank officials subsequently modified SWIFT messages by increasing the amount the overseas supplier would be able to draw in the L/C transaction.

Hong Kong links

Other banks involved in the case include Union Bank of India, Hong Kong and UCO Bank, Hong Kong.

The PNB is centre stage in India's most high profile trade-based money laundering case involving celebrity jeweller Nirav Modi whose alleged frauds may have cost Indian banks as much as US$3 billion.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.