Did the Securities and Exchange Board of India (SEBI) give a clean chit to Mehul Choksi twice?
According to a statement issued by the Citizenship By Investment Unit (CIU) of Antigua, the Indian capital markets regulator found no evidence of wrongdoing against the fugitive diamond trader, who is a co-accused in a ₹13,500-crore scam involving the Punjab National Bank and other public sector banks in India.
Mr. Choksi acquired the citizenship of Antigua and Barbuda in November 2017. The SEBI, however, has clarified that it has neither received any request from the CIU nor provided any information concerning Mr. Choksi or on the investigations against him.
CIO statement
On Thursday, the CIU issued a statement saying it has received information from SEBI that while there were two instances of the regulator probing Mr. Choksi, both matters had been closed for different reasons.
“In the conduct of its due diligence, the CIU received documentation of two instances in which the Securities and Exchange Board of India (SEBI), in 2014 and 2017, opened investigations on a corporate entity owned by Mr. Choksi,” the CIU statement said.
“We requested updates on the status of the investigations and received documentary confirmation, issued by the SEBI, stating that in one case, the matter had been satisfactorily closed, and indicating in the other that there is not sufficient evidence to pursue the matter further,” added the statement.
SEBI has, however, disputed the CIU statement saying it “has neither received any request from the Citizenship by Investment Unit (CIU) of Antigua for updates on any investigation nor provided any such information to CIU.”
The denial is significant since reports in February suggested that SEBI had re-opened investigations in a matter wherein it was alleged that Mr. Choksi and his company Gitanjali Gems did not make the certain mandatory disclosures and also submitted false information related to the quantum of shares pledged.
In March 2017, the then whole-time member S. Raman found Mr. Choksi and Gitanjali Gems, among others, prima facie in violation of various security market regulations and advised the capital markets regulator to conduct further investigations.
“... this is the fit case for investigation and SEBI should employ all the investigative powers entrusted to it to unearth the entire truth and to find out the role of alleged Choksi Group entities vis-a-vis the promoter entities of Gitanjali Gems,” said a 29-page order issued by Mr. Raman, adding that the SEBI should “investigate the matter of alleged manipulative trading in the scrip of Gitanjali Gems.”
Interestingly, the SEBI order had also stated that the regulator “shall endeavour to complete the investigation within six months.”
An e-mail query to SEBI regarding the current status of the matter remained unanswered till the time of going to the press.
