The Enforcement Directorate on Thursday filed the first charge sheet against diamond merchant Nirav Modi and 23 other accused persons and entities in the Punjab National Bank (PNB) fraud case. The agency has so far established alleged diversion of $629.21 million dollars (about ₹4,302 crore).
The Directorate has sent 15 letters rogatory (judicial request) to various countries seeking details of the foreign investments of Mr. Nirav Modi. The details so gathered have revealed diversion to several group companies, relatives and other dummy firms under his control. The funds have been traced to the United States, Hong Kong, Belgium and Dubai.
Among those arraigned in the charge sheet filed under the Prevention of Money Laundering Act are Mr. Nirav Modi’s father Deepak Modi, brother Neeshal, sister Purvi and her husband Mayank Mehta, and Nehal Modi.
The fugitive businessman’s three companies — Solar Exports, Stellar Diamonds and Diamonds R US — which had allegedly got Letters of Undertaking (LoUs) for ₹6,498 crore fraudulently issued through the PNB’s Brady House branch in Mumbai, have also been named along with his Firestar group of companies.
“The funds so obtained by the said three entities were partly used for payments to various overseas companies and also for offsetting earlier LoUs. Payments were made to 17 overseas entities in Hong Kong, Dubai and the United States since 2011 in the guise of export or import,” said an ED official.
During investigation, the ED found that all these overseas entities were “dummy” firms of Mr. Nirav Modi. “The directors and shareholders of these companies were the current or former employees of Firestar group of companies, who were working on the directions of Mr. Nirav Modi and his other trusted officials such as Shyamsunder Wadhwa, Aditya Nanavati, Mihir Bhansali and Saju Poulose,” the official said.
The Directorate recorded the statements of several “dummy” directors and associated persons, who disclosed that they were just mechanically transferring the goods and monies as directed by Mr. Nirav Modi, without any economic rationale or logic. Papers gathered from foreign jurisdictions proved the diversion.
“The modus operandi was fraudulent import or export, wherein there were no actual manufacturing activities undertaken in any of the dummy overseas companies. The invoices of export/import were overvalued to a huge extent so as to inflate the balance sheets and procure high credit facilities from banks,” the official said.
According to the agency, the export/import shown on paper was just rotational transactions.
“The jewellery exported from India was dismantled, the diamonds/pearls taken out of it and gold/silver were sent for melting. The melted metal was re-exported to Dubai or India and precious stones like diamonds and pearls were separately re-exported to India. The whole process was carried out without any substantial value addition and was only for inflating the turnover of Indian companies,” the official said.
The CBI has recently filed charge sheets in its two criminal cases pertaining to the PNB fraud involving Mr. Nirav Modi and his uncle Mehul Choksi. The two agencies now plan to get Interpol Red Notices issued against them and the other fugitives.
