Adding to the list of Indian billionaires with money laundering cases is jeweller Nirav Modi. The Punjab National Bank (PNB) on Wednesday linked the billionaire to fraudulent transactions worth Rs 11,360 crore from a single branch in Mumbai.
The CBI received a complaint from PNB on January 29 and a case against Modi was registered on January 31. However, by the first week on January, Nirav Modi and his family had already fled the country.
His brother, Nishal, a Belgian citizen who is married to the daughter of Mukesh Ambani’s sister, left India on January 1. Modi’s wife, Ami, a US citizen, and business partner, Mehul Choksi of Gitanjali Gems, fled on January 6.
Could the Rs 11,360 crore scam have been avoided?
In 2016, whistleblower Hari Prasad SV had written a letter to the Prime Minister’s Office (PMO), informing the government of the financial scam. The letter was also transferred to the Registrar of Companies (ROC), Ministry of Corporate Affairs.
“This scam and fraud done by the person/company based in Mumbai involving loss of Rs 1000s of crores of Indian public money which is underway by Mr Mehul C Choksi, Chairman and MD of Gitanjali Gems,” the letter said. It had attached PDF copy of the complaints by various franchisee victims against M/S Gitanjali Gems Ltd and Mr Mehul Choksi and its various subsidiary/sister companies made to various regulators.
Mehul Choksi is Nirav Modi’s uncle and Prasad was a franchisee of Gitanjali Gems.
As no action was taken, Prasad wrote, “Having failed to get the attention of any serious investigating authority, We have finally come to your door for justice.”
The letter also listed the names of 31 banks extending loans to the company. Prasad said that Gitanjali took loans to the tune of almost Rs 9,872 crore against its meagre assets of Rs 25-30 crore. “Definitely going to become NPA soon,” he warned.
Since 2006, the company is not paying taxes, the letter claimed.
During Feb 9 to 14, 2017 two PNB employees issued eight fraudulent Letters of Understanding (LoUs) of over Rs 280 crore to Diamonds R Us and Solar Exports – companies linked to Nirav Modi.
Prasad informed the PMO that there were several victims of Choksi’s fraudulent activities and were trying to fight cases against him. “MD Mr Mehul C Choksi has a knack of misusing the law to his advantage by appointing fleet of senior advocates/auditors and consultants,” he wrote.
In his letter, Prasad mentioned that The Times of India refused to cover the money laundering story as they are partners with Gitanjali Gems and have a financial interest in the company.
He concluded the letter by saying, “I hope you will take due note of the above and do your bit to save the country from another Subrata Roy (Sahara Group) and Vijay Mallya (Kingfisher group) and may such kind of white collar THUGS from looting public money and stashing it out of India…I believe still there are still lot of honest people/honest officers exist in India and someone has ring the bell.”
Government reaction after the fraud was made public
The finance ministry, in an attempt to speedily contain the crisis, issued an advisory late on Tuesday asking all banks to review all of their large exposures (or total loans to one customer). It has also asked the Enforcement Directorate (ED), which investigates frauds involving foreign currency and transactions, to probe the matter. Late on Wednesday, the ED registered a money laundering case against Nirav Modi and others on the basis of the CBI FIR.
Today, Law Minister R S Prasad said that “no one will be spared in the banking system who has sought to derail ordinary banking system to help Nirav Modi. This is regardless of stature and status of concerned official.” He added that the billionaire’s passport has been revoked, a Look Out Circular (LOC) issued against him and assets worth Rs 1,300 crore have also been seized.
Reports say that Nirav Modi is currently in Switzerland. The BJP government is facing criticism from the Opposition for not taking any action against the jeweller. Nirav Modi was a part of the CEO meeting with the prime minister on January 23, 2018 in Davos (by then Nirav Modi, his family members and Mehul Choksi had already fled the country).
After Vijay Mallya, Nirav Modi Leaves India After Allegedly Swindling Rs 11,360 Cr From PNB