PAC panel for probe by CBI, ED

A sub-committee of the Public Accounts Committee (PAC) has recommended that the ED and the CBI should probe as many as 35 jewellery houses in the country for misusing the 80:20 gold import scheme launched in 2013, for alleged money laundering, members of the panel said.

The members of the panel said that like fugitive diamantaire Nirav Modi and owner of Gitanjali Gems Mehul Choksi, these jewellers misused the scheme for money laundering and that they should be investigated for violation of the Prevention of Money Laundering Act, a member of the panel said on condition of anonymity.

In August 2013, the then United Progressive Alliance government had introduced the 80:20 rule, which said traders would be allowed to import gold only after they had exported 20 per cent of gold from their previous import. The move was implemented in view of current account deficit due to a surge in gold imports.

The rule was scrapped in November 2014 after the National Democratic Alliance came to power.

Senior officials of the Enforcement Directorate (ED) and the finance ministry on Tuesday appeared before a PAC sub-committee, headed by Bharatiya Janata Party (BJP) MP Nishikant Dubey, to discuss a CAG report of 2016 which, the members said, noted that the scheme resulted in a loss of over ~1 trillion to the exchequer, a source who was present at the meeting said on condition of anonymity. “The panel has recommended that 35 star or premier trading houses which were allowed to import gold under the scheme, should be probed by both the ED and the CBI (Central Bureau of Investigation) for money laundering and round tripping of black money,” a member said.

Earlier this month, while discussing the CAG report of 2016 on gold imports, the members had questioned P Chidambaram’s role over the alleged misuse of the 80:20 gold import scheme by jewellers, including fugitive Mehul Choksi, for money laundering, the sources said.

The revenue secretary and top officials of the ED, the Central Board of Direct Taxes (CBDT) and the Central Board of Excise and Customs (CBEC) had appeared before the panel.

The members pointed that the scheme resulted in a loss of over ~1 trillion to the exchequer and said even the CAG report had said to support the earning of $1 (around ~60 then) for jewellers, the government had to bear the expenditure in the form of duty foregone of ~221.75. Through the process known as round-tripping, black money that goes out of the country returns as white money.

The CBI has alleged that Choksi and his jeweller nephew, Nirav Modi, defrauded Punjab National Bank of around ~126.36 billion. Both left the country in January.