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The Hindu Profiles | On Nodeep Kaur, Nirav Modi and IAEA

Nirav Modi | The fugitive merchant

India moves a step ahead to get the trader extradited with a recent U.K. ruling

February 27, 2021 09:26 pm | Updated February 28, 2021 11:16 am IST

Riding high on the fame that his exquisite collection of precious gem jewellery had generated in the glamour world within such a short span, a third-generation diamantaire made it to the elite Indian billionaires’ club in 2013. However, Nirav Modi’s success story lasted for just about a decade. Wanted by Indian agencies for bank fraud and money laundering, he now awaits his fate currently confined in London’s Wandsworth prison.

With the Westminster Magistrates’ Court allowing the extradition request against him on Thursday, Mr. Modi’s first attempt to escape trial in India has failed. His wife Ami (U.S. citizen); father Deepak Modi; younger brothers, Nehal and Neeshal; sister Purvi and her husband Maiank; and uncle Mehul Choksi are also facing probe by the Central Bureau of Investigation and the Enforcement Directorate.

While Mr. Modi is an Indian citizen, his parents and younger siblings are Belgian nationals. His grandfather was a diamond trader from Gujarat’s Surat, from where he shifted to Singapore. His father then migrated to Belgium in the 1960s. At the age of 19, the aspiring diamond merchant dropped out of the Wharton School to learn the tricks of the diamond trade from his uncle, Mr. Choksi, who has fled to Antigua and is now facing extradition proceedings there.

Back in 2017, when the agencies did not have the slightest inkling of the alleged crimes being committed by him, the businessman made it to the list of Indian billionaires for the fifth consecutive year. He often talked about business expansion in other parts of the world, in Hong Kong, Dubai, New York, Macau, Singapore, Beijing and London. The top celebrities engaged by him to endorse his collections played a key role in establishing his brand.

Nothing seemed unusual when Mr. Modi and other members of the family flew abroad in the first week of January 2018. However, all hell broke loose as reports of a scam emerged.

As it turned out, the CBI received a complaint from Punjab National Bank (PNB) on January 29, 2018, days after the family had left the country, alleging that Mr. Modi’s companies were involved in the fraudulent use of eight Letters of Undertaking (LoUs), which is a form of bank guarantee to facilitate overseas transactions by getting credit from foreign banks.

The perpetrators, in conspiracy with certain officials of the PNB’s Brady House branch in Mumbai, had exploited the flaws in the system of keeping LoU records. About a month later, the bank again wrote to the CBI, this time informing that there were 150 fraudulent LoUs worth ₹6,498.20 crore, issued to companies that were part of Mr. Modi’s Firestar Group.

Money laundering probe

Based on the CBI case, the ED launched a money laundering probe into the financial scam. The agencies found that Mr. Choksi was also part of the racket. Further enquiries revealed that he had already taken Antiguan citizenship. The diverted funds were used to acquire prime properties in different countries, for which Trusts were also set up.

Dummy directors and partners, who were mostly the employees of Mr. Modi, were roped in. The ED discovered that the businessman had floated a number of overseas companies in Hong Kong and Dubai, which received the proceeds of the fraud, noted the U.K. court’s order.

These companies were used for the circular trade of diamonds, pearls, gold and jewellery at highly inflated values to give the impression that the firms in receipt of the LoUs issued via the PNB were engaged in legitimate trade.

The agencies alleged that in a bid to escape the law, Mr. Modi also got the dummy directors of Dubai-based firms shifted to Cairo, where they were kept in confinement. Their mobile phones were disposed of and a server in Dubai, in which all the data related to his companies was stored, was also destroyed.

On the strength of two sets of criminal proceedings pursued by the CBI and the ED, India requested for Mr. Modi’s extradition from the U.K. in July-August 2018. Another request was made in February last year on the allegation that he had destroyed evidence and threatened witnesses. Mr. Modi was arrested in London on March 19, 2019, and since then, he has been in judicial custody there. His wife and three children are said to be in the U.S.

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