Billionaire Nirav Modi charged in Rs. 280cr PNB cheating case
Billionaire diamond merchant Nirav Modi, his brother and wife have been booked by the CBI for allegedly cheating Punjab National Bank (PNB) of Rs. 280.7cr in 2017. PNB had lodged a complaint against the jeweler, alleging he embezzled the money on the basis of fake documents with the help of some bank employees, including its now-retired deputy manager GN Shetty.
A brief introduction to the founder of Firestar Diamond
Modi, the founder of the $.23bn Firestar Diamond, was born in India but grew up in Belgium. He dropped out of Wharton and came back to India, where he assisted his uncle in the diamond trade. Eventually, he launched the Nirav Modi brand, which has stores in Delhi, Mumbai, London, New York, Hong Kong and Macau. Forbes estimates his current net worth at $1.84bn.
How did the billionaire "embezzle" money?
PNB named in its complaint Nirav, brother Nishal, wife Ami and Mehul Chinubhai Choksi, partners of Diamond R US, Solar Exports, Stellar Diamonds. These firms approached PNB with import documents and requested to allow buyers' credit for payments to overseas suppliers. PNB asked for 100% cash margin for relevant Letters of Undertakings (LOUs), but they objected, claiming they had used this facility before too.
The LOUs were fraudulently issued, PNB claims
When PNB checked its records, they didn't find any such facility offered to the firms. It now claims its former deputy manager Shetty and Manoj Kharat had fraudulently issued LOUs to the firms without making entries in the bank's system. Eight LOUs totaling Rs. 280.7cr had been issued for Allahabad Bank and Axis Bank. PNB is checking its system for more such LOUs.
CBI raided Modi's premises in various cities last month
"While tracing old entries, it transpired that buyer's credit based on fake LOUs might have been paid through NOSTRO A/C," PNB has alleged. "The public servants committed abuse of official position to cause pecuniary advantage to Diamond R US, Solar Exports, Stellar Diamonds." The CBI, which raided several of Modi's premises in January, has now charged the four with criminal conspiracy, cheating and others.
