The Enforcement Directorate (ED) on Thursday conducted searches on premises linked to billionaire diamond merchant Nirav Modi in three States, in connection with the Rs.11,500-crore fraudulent transactions in the Punjab National Bank (PNB).
“Searches are underway at four locations in Mumbai, including Mr. Modi's office and showroom in Kala Ghodathree; in Surat; and two in Delhi,” an ED officer said.
The premises of a senior bank official was also searched.
Earlier this year, the CBI registered an offence against officials of the bank as well as Mr. Modi and his relatives, who are partners of two diamond firms in Mumbai, for allegedly committing a ₹280 crore fraud in 2017.
The ED subsequently initiated inquiries and booked the Modis under the Prevention of Money Laundering Act (PMLA) on a complaint from the PNB.
Mr. Modi left the country on January 1, 2018, while his wife Ami, an American citizen, left the country on January 6. Diamond jeweller Mehul Chokshi left the country on January 4. Mr. Modi's brother, Nishal, also an accused, is a citizen of Belgium. He too left the country on January 1.
The CBI issued look-out circulars against all the accused on January 31, the day the FIR was registered.
The fraud in PNB
The PNB has alleged fraud at one of its Mumbai branches through illegal clearance of payments to be made abroad against imports, by facilitating buyer’s credit to the beneficiaries. In many cases, the funds so raised for clearing import bills were not used for such purposes.
The racket was being run allegedly in connivance with certain bank employees at the bank’s Mid Corporate Branch in Brady House since 2011.
As alleged, the beneficiaries got Letters of Undertaking (LoU) issued from the PNB without any sanctioned credit limit or adequate account balance, to avail of buyer’s credit facility from overseas branches of Indian banks and for funding the Nostro accounts of the PNB.
As per rule, the borrowers have to settle the accounts within 90 days. However, it is alleged that the beneficiaries used to get another LoU issued during the period, for an amount including the pending sum, to evade detection and delay repayments. The scam remained undetected as no entries of the suspect transactions were made in the bank’s central database. In all, 10 bank officials have been suspended for alleged nexus with the beneficiaries. Based on the two complaint lodged by the PNB against Mr. Modi, a jewellery company and others, the CBI, on January 31, CBI registered caseS against Mr. Modi, his wife, brother and Mr. Chokshi, for allegedly cheating the PNB of over Rs.280 crore in collusion with then Brady House branch’s Deputy Manager Gokulnath Shetty and single-window operator Manoj Kharat. The bank alleged that the bank officials had fraudulently issued eight LoUs, totalling 4.42 crore dollars (equivalent to Rs.280.70 crore) for the Hong Kong-based Allahabad Bank and Axis Bank.
Published - February 15, 2018 12:21 pm IST
