ED files first charge sheet against Nirav in PNB scam
FRAUD PROBE Invoking various sections of the PMLA, first charge sheet deals with shell companies created by Modi and associates to get fake LoUs from banks
NEW DELHI: The Enforcement Directorate (ED) on Thursday filed its first charge sheet against Nirav Modi and his associates for perpetrating a fraud worth over ₹13000 crore, in a Mumbai court.
While this deals only with Modi’s involvement in the Punjab National Bank (PNB) fraud, Enforcement Directorate will soon file its second charge sheet against Modi’s uncle, Gitanjali Group promoter Mehul Choksi.
These two charge sheets will become the basis for the Enforcement Directorate to take further action against Modi and Choksi under the new Fugitive Economic Offenders ordinance, said an officer in the agency.
“The total fraud is close to ₹13,000 crore, of this Modi’s share is ₹6,500 crore and the remaining is Choksi’s doing,” said an officer in the Enforcement Directorate .
Invoking various sections of the Prevention of Money Laundering Act (PMLA), the first charge sheet deals with shell companies created by Modi, his relatives and associates to get fake letters of undertaking (LoUs) from Indian banks and then launder close to ₹6,500 crore between his domestic and foreign shell companies.
“Three firms of Nirav Modi, Solar Exports, Stellar Diamonds and Diamonds R Us which had fraudulently obtained ₹6,498 crores through letters of undertaking issued by Punjab National Bank, Brady House branch, Mumbai and his Firestar group of companies, are accused in the case,” said the officer mentioned above.
The Enforcement Directorate explained that the funds so obtained by these three entities were partly utilized for payment to various overseas companies and also for offsetting earlier LoUs.
This money was used to pay 17 overseas shell companies in Hong Kong, Dubai and USA since 2011 in the guise of export /import.
“The export/import was also not genuine and was just rotational transactions. The jewelry exported from India was dismantled and diamonds/pearls taken out of it and gold/silver were sent for melting,” said a statement issued by the Enforcement Directorate after filing the charge sheet.
“The melted metal was re-exported to Dubai or India and diamonds/pearls were also 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, so as to acquire maximum credit facilities from the banks,” it added.
Apart from Nirav Modi, his relatives, Purvi Modi, Maiank Modi, Neeshal Modi, Nehal Modi and Deepak Modi are also named as accused by the Enforcement Directorate along with several employees of his Firestar Group of companies.
While this round tripping of money generated from bank credit based on fake letters of undertaking started in 2011, it only came to the fore in January this year. Central Bureau of Investigation (CBI) filed an FIR against Nirav for defrauding Punjab National Bank by ₹13,000 crore on February 14 and has filed two charge sheets in the case.
Both Nirav Modi and his uncle Mehul Choksi had left the country before criminal proceedings began against them.