Diamond merchant Nirav Modi was the personal beneficiary of ₹137.33 crore paid by Punjab National Bank (PNB) from three dummy companies and also an indirect recipient of letter of undertaking (LoU) funds, says a complaint filed by the Enforcement Directorate.
The Hindu has a copy of the complaint. “The LoUs issued in 2017 became due in January 2018, and the scam came to the fore since the new officials posted at the PNB Brady House branch refused to issue new LoUs without the requisite documents and sanctions, resulting in subsequent default in the repayment by the said three firms. Initially, the LoUs were issued for smaller durations — for three months. However, it was later changed to 360 days in order to gain maximum benefit out of these dealings. It is seen that the repayments towards previous LoUs were made either by diverting money received from some other LoU or by creating more and more LoUs, whereby increasing the exposure,” it says.
The ED says: “₹2240.63 crore was transferred to Firestar Group Companies from Axis Bank accounts of the three firms, namely, Diamond R US, Solar Exports and Stellar Diamond. From the credits in PNB accounts of the three firms, it has come to light that out of the said ₹2,240.53 crore which was transferred to Firestar Group, run by Mr. Modi, ₹2,076.06 crore was further sent to the PNB accounts for payment to earlier LOUs, completing a full circle.”
Indirect recipient
Mr. Modi has been paid ₹137.33 crore from the three dummy companies and therefore is an indirect recipient of the LoU funds and ₹1,302 crore was received in PNB accounts of the three companies from other sources. A total of ₹12,655 crore was paid to banks from PNB accounts to settle the earlier issued LoUs. The ED has searched Mr. Modi’s companies: two in Delhi, seven in Surat, five in Mumbai, and one in Jaipur. It found various assets including raw gold, diamonds, pearls, precious stones and much more. The total seizure value as per the books is more than ₹1,785 crore while the worth as per the valuation report is around ₹489 crore.
Gokulnath Shetty, the then Deputy Manager of the PNB at Brady House, in his statement told the ED: “Last year, approximately 100-150 LoUs were issued to Mr. Modi’s group companies of around ₹5,000 crore. He also said that for Mehul Choksi’s companies around ₹2,000-3,000 crore worth LoUs were issued for a period of one year towards import of pearls. Mr. Shetty also unveils that foreign letters of credit (FLC) were issued for around ₹2,000-3,000 crore and that there was no sanctioned limit for it and mentions 100% margin was available for Nirav or Mehul group companies.”
