ED files charge sheet against Nirav Modi

The Enforcement Directorate( ED) on Thursday filed its first charge sheet in the ~140- billion P NB fraud case involving di am ant air e Nirav Modi and his associates, officials said. They said a 12,000- page charge sheet had been filed before a special court under sections of the-money-laundering-law.

The Enforcement Directorate (ED), on Thursday, filed its first charge sheet related to the ~140 billion Nirav Modi scam. The charge sheet was filed against Modi and 23 others associated with him — including his siblings and a number of his firms — for offences under the Prevention of Money Laundering Act. The judicial authorities have not yet taken cognizance of the charge sheet, but are expected to do so in a day or two. Once that is done, ED officials will move to file another charge sheet, this time against Gitanjali Group promoter Mehul Choksi and his associates. The charge sheet against Choksi will be filed in a week or so, highly placed sources said. These two charge sheets will be the basis for ED to take its first action under the new Fugitive Economic Offenders ordinance, which was promulgated in late April. It will use provisions under the Ordinance to attach more assets of Modi, Choksi, and their associated companies. The charge sheet looks to establish that the motive behind the letters of undertaking (LoUs) scam was round-tripping of funds to launder money. Officials say that in total, the two charge sheets could name officials from as many as eight banks, who were complicit in one way or the other. At least six of these banks are said to be state owned banks. The firms named in Thursday’s charge sheet include Modi’s flagship Firestar group of companies, M/s Solar Exports, Stellar Diamonds and Diamonds R Us. According to the charge sheet, the latter three companies had fraudulently obtained ~65 billion through LoUs issued by Punjab National Bank, Brady House branch, Mumbai. “The funds obtained by said three entities were partly utilised for payment to various overseas firms and also for offsetting earlier LoUs. It was revealed during investigation that the payments were made to 17 overseas entities in Hong Kong, Dubai, and the US since 2011 in the guise of export/import,” said an official statement by the ED. “During further investigation, it was revealed that all these overseas companies are dummy companies of Nirav Modi. The directors and shareholders on these companies were dummy directors and were employees of Firestar group of companies who were working as per the directions of Nirav Modi and his other trusted officials,” it said. “To date, diversion of the proceeds of crime to the extent of $629.21 million has been traced to several group companies, relatives and other dummy companies under the control of Modi and his associates,” the statement added. The charge sheet alleges that the various dummy directors were just mechanically transferring goods and money according to the directions of Modi without any economic rationale and logic. It says that documents were obtained from overseas jurisdictions which prove the diversion and layering of the proceeds of crime. The charge sheet lists out a complex modus operandi which involved fraudulent import and export without any underlying manufacturing activity in any of the dummy overseas companies. The invoices of imports and exports were overvalued to a huge extent, so as to inflate the balance sheets and procure high credit facilities from the banks.