Mumbai: In fresh and startling revelations, a Forensic Audit into the Punjab National Bank (PNB) Rs 13,500-crore scam involving absconder diamantaires Mehul Choksi and his nephew Nirav Modi, has zeroed in on the possible ‘modus operandi deployed to siphon off their illegal funds.
For starters, in the Forensic Audit - conducted by the Belgium-headquartered BDO's India branch - it was found how Choksi's company Gitanjali Gems Ltd's multiple exporters of rough diamonds used a common account in the same bank, according to sources.
The exporters were: 4Cs Diamond, EMA Diamond LP with an account in Israel Discount Bank, Tel Aviv; Crown AIM Ltd, Taipingyang Trading Ltd. account with UCO Bank in Hong Kong; and Munic Gems LLC, Saumil Diam LLC holding an account in J.P. Morgan Chase, New York.
The Forensic Audit team found that Choksi's diamond companies made "high value sales and purchases" through 'potentially non-existent partners' (bogus companies), using the same invoice for making multiple imports.
Some of these ‘non-existent partners' include Premier Intertrade, Asian Corporation and Iris Mercantile, as per the forensic probe conducted for the Mumbai-based Bank of India (BoI).
The PNB also informed the BoI how fraudulent Letters of Undertaking (LoUs) of Rs 3,032.12 crore and FLCs worth Rs 1799.36 crore were issued in favour of Choksi's group companies - Gitanjali Gems Ltd., Gili India Ltd. and Nakshatra Brands Ltd.
The Forensic Audit delved deeper to detect that a lion's share - 87 per cent - of the Letters of Undertaking (LoU) pertained to only two companies - 4Cs Diamond and Shanyao Gong Si Ltd, both in Hong Kong.
BDO is investigating the entire methodology of the frauds perpetrated by the ‘Mama-Bhanja' duo of Choksi-Nirav Modi and their companies, how the funds were used/misused/diverted/siphoned/etc, reportedly for a long-term period starting from 2010, informed the sources.
With this, the BoI becomes the latest in the string of Indian banks which have been defrauded directly or indirectly by the absconding duo since the PNB in January 2018 first admitted to the infamous Rs 13,500-crore scam, one of the biggest to clobber the country's banking system so far.
After PNB, it was the State Bank Of India (Rs 405 crore), Oriental Bank Of Commerce (Rs 289 crore), Punjab & Sind Bank (Rs 44.10 crore), and now the newest in the Choksi-Nirav Modi ‘hit-list' is the BoI (Rs 175 crore).
The BoI has named the prime defaulters as: Gitanjali Gems Ltd. and its group companies, Managing Director Choksi, Dhanesh V. Sheth, Nazura Y. Ajaney, Chandrakant K. Karkare (all Directors) and Pankhuri A. Warange - who is the Company Secretary.
Besides, there are corporate guarantors like Decent Securities & Finance Pvt. Ltd., Eureka Finstock Pvt. Ltd., Hyderabad Gems SEZ Ltd., Nashik Multiservices SEZ Ltd., and Decent Investment & Finance Pvt. Ltd.
The BoI said that although the aforementioned individuals/companies had the capacity to repay all their dues, they deliberately failed to fulfil their obligations towards the lenders and so have been declared as ‘Willful Defaulters'.
It has also labelled as ‘Wilfull Defaulters' Fire Star International Ltd's Managing Director Nirav Modi, Executive Director Haresh V. Shah, Non-Executive Director Angelina Nguyen, directors Suresh C. Senapaty, Ravi Shanker Gupta, besides independent directors Gautham Mukkavilli and Sanjay Rishi.
Hoping to recover its dues, the BoI has initiated further suitable proceedings against the companies and individuals.
"It is high time that the government directs all the banks defrauded by Choksi-Nirav Modi to come clean on their exposures in public interest and make a united effort to recover their dues," banking expert and Maharashtra Convenor of Trade Unions Joint Action Committee V. Utagi told IANS.
In a recent booster to the Indian investigators, on December 4, 2019, the Bombay High Court rejected Choksi's plea against the proceedings to declare him a ‘fugitive economic offender'.
A day later, a Special PMLA Court has proclaimed Nirav Modi to be a ‘fugitive economic offender' - only the second so far in India, paving the way to attach and dispose off all his known assets/properties to recover the outstanding dues.
While ‘Mama' Choksi has settled down in Antigua & Barbados, ‘Bhanja' Nirav Modi is currently under judicial custody in a London jail with India making efforts to get them both extradited.