PNB Scam: BJP cites Chidambaram-Mehul Choksi link, blames UPA's 80:20 gold import rule

NEW DELHI: After being on the back foot in the aftermath of the Rs 12,700 crore Punjab National Bank (PNB) scam, the ruling Bharatiya Janata Party (BJP) on Monday tore into the Opposition camp saying it’s the actions of the previous United Progressive Alliance government that worsened the bad loan situation.

While the opposition parties in Parliament tried to put the government on the mat for the multi-crore banking scam, the BJP said the banking system derailed during the UPA rule under the leadership of the “so-called economist Prime Minister”.

The BJP deployed party veteran and Union minister Ravi Shankar Prasad to launch the attack on the Congress. Prasad said the UPA did not allow correct data to be entered into bank records, making it easy for fraudsters to thrive.

Singling out former finance minister P Chidambaram, he alleged that the Congress leader had favoured seven companies including Mehul Choksi’s Gitanjali Group in 2013-14 when the UPA introduced the 80:20 import rule for gold traders.

“On May 16, 2014, the date of the declaration of 2014 election results, the then finance minister gave his blessings to seven private companies under the 80:20 scheme. One of the companies was Gitanjali,” said Prasad adding that the scheme was scrapped in November 2014 by NDA government.

Prasad demanded an explanation from Chidambaram and Congress president Rahul Gandhi why these seven companies were given permission “on the day of election results”.Calling for the “real image” of Chidambaram to be exposed, he suggested that the former FM was not acting on his own but there was a direct blessing from the higher-ups in Congress.

“Mr. Chidambaram, please reply… He should reply who were those persons who were lobbying for those companies and also what was the cut?” he added.Meanwhile, sources told Express that finance ministry officials will share all details related to the 80:20 gold import scheme with Parliament’s Public Accounts Committee.Prasad also alleged that advances (to banks) rose during the UPA regime but were not recorded in the books.

Extract from the CAG report

Under the20:80 scheme, plain gold jewellery, bangles or medallions with negligible or no value addition were exported to related parties. Even cases of export of 24 carats gold jewellery were noticed. In many cases plain jewellery were exported within same day or within 1 to 3 days of receipt of gold.

Some of the remittances were being received very next day, which does not seem to be possible in case of genuine jewellery exports.

This also meant that scrap and crude products were exported in the guise of plain jewellery by these agencies who were importing high quantities of gold by repeated exports at very short intervals, so as to maximize their domestic sale entitlement against 80 per cent component of 20:80 scheme

CAG had indicted government on gold import scheme

P Chidambaram as finance minister gave seven private firms benefits under 80:20 gold import scheme on May 16, 2014, the day BJP was swept to power.

One of the beneficiaries was PNB scam-tainted Gitanjali Gems promoted by Mehul Choksi.

A 2016 CAG report said the gold scheme caused revenue loss of around Rs 1.3 L cr to the exchequer
To support the earning of $1 (Rs 60 then) for jewellers, government had to bear the expenditure in the form of duty foregone of Rs 221.75, the CAG said in its indictment, according to Nishikant Dubey, head of Public Accounts Committee.