PNB fraud: net widened; Modi, Choksi passports suspended

Widening their search on Friday, The Enforcement Directorate on Friday summoned billionaire diamond merchant Nirav Modi and his business partner and jewellery chain promoter Mehul Choksi in connection with its money laundering probe in the alleged Rs11,400 crore fraud in Punjab National Bank.

Nirav Modi (Left) and Mehul Choksi  

While Modi runs a jewellery brand chain under his name, his uncle Choksi is the promoter of Gitanjali Gems.

Officials of the ED and the Central Bureau of Investigation expanded their search operation on properties linked to the accused. As many as 35 locations in 11 states have been searched and diamond, gold, jewellery, and precious stones worth over Rs 5,100 crore sealed.

"ED seized jewellery, gold, diamond, precious metal and stones at stock price of Rs 5,100 crore in Nirav Modi case yesterday. Independent valuation has been started," the agency said in a statement.

Modi and Choksi have been summoned under the Prevention of Money Laundering Act and asked to appear before the ED within a week's time. This of course is unlikely to happen as the duo is believed to have fled the country in the first week of January.

The notices were handed over to the directors of the firms of the two businessmen, the officials said.

The ministry of external affairs has meanwhile Friday suspended the passports of Modi and Choksi on the advice of the ED. The passports have been suspended for a period of four weeks and the duo have been asked to respond within a week on why their passports should not be impounded or revoked under the Passports Act 1967.

The investigation agencies, banks, and now Interpol (International Criminal Police Organisation) have tightened the noose around Modi, who's at the heart of the alleged fraud at PNB's Mumbai branch.

The bank has fired 18 employees, while the government has promised it won't "spare anyone".

The first complaint against Nirav Modi's company was filed on 29 January, but he and his family had already fled the country before that.

Nirav Modi has reportedly assured the PNB authorities repayment of the entire amount he is alleged to have embezzled, but has been asked to provide a concrete plan.

The ED has registered a PMLA case against the two and others based on a First Information Report by the CBI, which was the result of a PNB complaint. The agency is probing if bank funds were laundered and the proceeds used by the accused to create illegal assets.

Modi, 46, has been a regular feature on the lists of rich and famous Indians since 2013. He was booked by the CBI, along with his wife, brother and Choksi on 31 January for allegedly cheating the state-run PNB to the tune of Rs280 crore. The bank subsequently sent two more complaints to the CBI on Tuesday, saying the scam was worth more than Rs11,400 crore. A fresh FIR has been filed by the CBI on Friday.

The CBI had earlier raided the residences of Modi, his brother, wife and Choksi, all partners of Diamond R US, Solar Exports and Stellar Diamonds, and two bank officials - Gokulnath Shetty (now retired) and Manoj Kharat, who were also named in the FIR as accused.

"The public servants committed abuse of official position to cause pecuniary advantage to Diamond R US, Solar Exports, Stellar Diamonds and a wrongful loss of Rs280.70 crore to Punjab National Bank during 2017," the CBI FIR has alleged.

The jewellery designer is a citizen of the country but his brother Nishal and wife Ami are not Indian nationals.

"The fraud in PNB is a case of operational risk arising on account of delinquent behaviour by one or more employees of the bank and failure of internal controls. The RBI has already undertaken a supervisory assessment of control systems in PNB, and will take appropriate supervisory action," the Reserve Bank of India said in a statement.

Jewellery traders fear that after this fraud, banks would be more cautious about lending to them, which would hurt their credit flow. They urged that because of the fraud, the entire industry should not be branded as 'risky' industry.