Indian police arrest six as inquiry broadens into $1.8bn bank fraud
India’s federal police have arrested six people, including employees of a billionaire jeweller, as the inquiry into one of the country’s biggest bank scams widens.
The Central Bureau of Investigation is looking into allegations that Nirav Modi, a jeweller to Hollywood stars including Kate Winslet and Naomi Watts, was involved in defrauding India’s second-largest state bank of almost US$1.8 billion (Dh6.6bn).
Mr Modi and his uncle and business partner, Mehul Choksi, a diamond merchant, have been accused by investigators of defrauding the state-owned Punjab National Bank of 2.8bn rupees (Dh158.7m).
The bureau has raided luxury diamond sellers and properties connected to the pair and has contacted Interpol to track down Mr Modi, who is believed to be abroad.
Investigators said senior associates from Mr Modi’s Firestar Diamond company and Mr Choksi’s Gitanjali group were among those detained in the latest arrests on Tuesday evening.
“We have arrested five people connected to both Nirav Modi and Mehul Choksi’s companies and they will be produced in CBI court today,” said Abhishek Dayal, the bureau’s spokesman.
Mr Dayal said the manager of the bank’s branch in Mumbai was also detained and was to go to court yesterday.
The bureau has arrested a dozen bank officials and employees linked to the jewellers since the Punjab National Bank announced last week it had detected fraud of almost $1.8bn at its Mumbai branch.
Several of those arrested are suspected of facilitating fraudulent lines of credit to companies linked to Mr Modi and Mr Choksi, investigators have said.
Mr Modi has written to the bank accusing it of acting hastily and “erroneously” inflating the amount he owed the bank, the Press Trust of India news agency reported.
“Your actions have destroyed my brand and the business and have now restricted your ability to recover all the dues,” he said.
India’s government is trying to reduce the crippling debts of the country’s embattled state banks. It recently announced a $32bn recapitalisation plan to help them clean up their books.