Billionaire jeweller under lens as PNB jolted by 11,300 crore fraud
Scam On Since 2011; CBI & ED Launch Probe
In one of the biggest fraud cases to hit Indian banking, Punjab National Bank (PNB) informed stock exchanges on Wednesday that it has been hit by embezzlement amounting to Rs 11,300 crore at one of its branches in Mumbai.
Although the bank did not name any person or company,
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it had lodged a complaint with CBI on January 31 naming billionaire diamond merchant Nirav Modi and a few others in a Rs 280-crore fraud. The complaint also mentioned his wife Ami Modi, his brother Nishal Modi and his uncle Mehul Choksi, MD of Gitanjali Gems — a listed company.
Two PNB officials, Gokulnath Shetty and Manoj Kharat, were also named.
The Modis and Choksi are partners in three businesses — Diamonds R US, Solar Exports and Stellar Diamonds.
The Enforcement Directo- rate has also initiated a money laundering case against the Modis, agencies had reported on Wednesday.
The news sent PNB stocks tumbling nearly 10% lower on the Bombay Stock Exchange.
The fraud is worth almost eight times the bank’s 2016-17 profit and nearly a third of its market cap on Wednesday’s closing price.
In a matter of a few days, the scale of the fraud has grown from Rs 280 crore to over Rs 11,300 crore.
Hailing from a family of Antwerp-based diamond brokers, Nirav Modi, 48, was sent as a19-year-old to Mumbai to learn the ropes of the trade from his maternal uncle, Mehul Choksi. Despite a late entry into the retail business in 2010, he quickly gained a reputation as India’s jeweller to the stars as Hollywood A-listers like Kate Winslet and Taraji P Henson walked the red carpet in diamonds from his eponymous brand. By 2013, he was in Forbes’ billionaires list.