Loan frauds amount to almost $10b
INVESTIGATORS RAID GITANJALI GROUP’ OFFICES IN WIDENING PROBE INTO COUNTRY’S BIGGEST BANKING SCAM
State-run banks have reported 8,670 ‘loan fraud’ cases as investigators raid Gitanjali group offices in widening probe into biggest scam |
Investigators raided the offices of jewellery retailer Gitanjali yesterday in a widening probe into a $1.77 billion (Dh6.50 billion) loan fraud at state-run Punjab National Bank, the biggest bank scam in the country’s history.
The case is centred around diamond billionaire Nirav Modi who is accused of colluding with bank employees to fraudulently obtain advances for payments to overseas suppliers to his business stretching from New York to London to Beijing.
On Thursday, companies linked to Modi, who is out of India and whose whereabouts is not known, were raided and yesterday the Central Bureau of Investigation (CBI) targeted the Gitanjali group of firms led by his uncle Mehul Choksi.
A police source said the CBI, in a new case, has accused the Gitanjali group of defrauding PNB, the country’s second largest lender, of $763 million.
India’s foreign ministry said it has suspended the passports of Modi and Choksi for four weeks, and has given them a week’s time to voice objections to its plan to revoke the documents.
Searches were conducted at 20 places in six cities, including offices, factories and residences, linked to Gitanjali and its directors, the police source said.
Choksi, who is managing director of Gitanjali Gems Ltd, did not answer his mobile phone. Gitanjali Gems also did not respond to a request for comment.
Choksi hand denied
Gitanjali has previously denied Choksi’s involvement in the fraud and said he would take “necessary legal action” to get his name removed from the police case.The biggest bank fraud in India’s history has raised fears about the scale of problems in the banking sector that is already saddled with $147 billion of soured debt. India’s banks recently received a $14 billion government bailout.
It has also provided an opportunity for Prime Minister Narendra Modi’s critics to target the government for the loss caused to the state lender and accuse it of wrongdoing in high places.
Modi, the jeweller, was as recently as last month at the World Economic Forum in Davos where the Indian prime minister, who is no relation of his, was a star guest. Indian media carried a group photograph with Prime Minister Modi in the foreground and Nirav Modi grinning between rows of Indian business leaders behind him.
A group of members of the youth wing of the main opposition Congress party staged a protest in the capital New Delhi with placards that said “Modi robs India”.