Fugitive diamantaire, family cornered by UK court for embezzling $1 billion
LONDON: The high court in London on Tuesday ruled that the May 2022 Worldwide Freezing Order (WFO) for $932.5 million against fugitive economic offender Jatin Mehta and his family must continue. Mehta, his wife Sonia, and sons Vishal and Suraj, face allegations of misappropriating $1 billion obtained by way of bullion loan facilities.
Nearly a decade after Winsome Diamonds and Forever Precious Diamonds, companies owned by the Mehtas, defaulted on repayments to banks in India, the family is now feeling the heat in London.
The CBI and ED had begun investigations against the Mehtas but due to a variety of technicalities, including their fleeing country, nothing much came of it.
Jatin Mehta was believed to have acquired citizenship of St Kitts and Nevis, in the Caribbean, a tax haven and a country which does not have extradition arrangements with India. However, private investigators found the Mehtas living in luxury in London, after which Standard Chartered Bank, one of the lenders, along with Grant Thornton, an accountancy and advisory firm, mounted legal proceedings against them.
Lawyers took note of the fact that the Mehtas had used seven entities registered in the UK and Ireland as vehicles to allegedly launder the fraud proceeds after which they were dissolved. As they faced allegations of using Uk-registered companies to carry out complex fraudulent transactions, and due to their residence in London, the high court in May 2022 had granted a worldwide freezing order, directing them to disclose their assets.
Thereafter, substantial financial restrictions were placed, limiting the amount of money that the family can spend. Facing financial squeeze, the Mehtas had sought discharge from the WFO forwarding several arguthe ments -- based on non-participation of Indian banks, the Indian civil and criminal proceedings, lack of fair presentation, weak and insufficient evidence and others – all of which were rejected by the high court.
Now, more Indian banks are likely to share information and join forces with Standard Chartered and Grant Thornton to reclaim the money due from the Mehtas.
It is going to be a long drawn battle as the court will hear the Mehtas’ application challenging the continuity of the WFO on the grounds of jurisdiction in the next few weeks. The matter – whether the WFO is valid or not - will then go on for trial.
Justice Edwin Johnson said there is a “good arguable case” against the Mehtas that the case involves a “major international fraud”, but also that a change of circumstances in future would mean that they could be discharged from the WFO.
The Mehtas are accused of defaulting on the repayment obligations to several banks. According to precious metal facilities, they would purchase gold financed by bullion banks, which was secured by a consortium of Indian banks in 2008-09.
However, in 2013, Winsome and Forever Precious claimed it had exported gold and jewellery to 13 UAE companies who had defaulted and hence they were not in a position to pay the Indian banks. The CBI had alleged that these 13 companies were allegedly related to the Mehtas and were used to launder the proceeds. So far, the Mehtas have disclosed assets worth $146 million in the court.