Diamond merchant booked for 280 cr fraud

The CBI has booked billionaire diamond merchant Nirav Modi, his brother and wife and a business partner for allegedly cheating Punjab National Bank of over Rs 280.70 crore.

Nirav is the founder of the $2.3 billion Firestar Diamond and counts among his clients several world renowned celebrities. He also has designer jewellery boutiques across three continents - in London, New York, Las Vegas, Hawai, Singapore, Beijing and Macau. In India, Modi has his stores in Mumbai and Delhi

The CBI has acted on a complaint from the Punjab National Bank. The scandal has erupted at a time of heightened concern about Indian banks` pathetic record of bad loans, which has choked new lending.

The bank has alleged in the complaint that a fraudulent issuance of Letters of Undertakings (LOU) took place on January 16, 2018, for and on behalf of the accused firms, which approached the bank and presented a set of import documents to the branch with a request to allow buyers' credit for making payment to overseas suppliers.

The bank claimed that its deputy managers (now retired), Gokul Nath Shetty and Manoj Kharat, had fraudulently issued the LoUs without following the prescribed procedure of obtaining request applications, documents and approval of authorities and without making any entries in the bank's systems.

The banks said they fraudulently issued eight LOUs totalling USD 4.42 crore, equivalent to Rs 280.70 crore, for Hong Kong-based branches of the Allahabad Bank and the Axis Bank.

Claiming that public money to the tune of Rs 280.70 crore seems to have been "embezzled" by committing fraud, the bank asked the CBI to register the case.

A spokeswoman for Nirav Modi declined to comment. According to Forbes, Modi has a net worth of $1.84 billion through his jewellery design and retail businesses, making him the 85th richest person in India.