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India’s list of high-profile businessmen who have quietly left the country on the heels of a controversy is getting longer as extradition cases linger in foreign courts, with little hope of early and favourable judgements for Indian agencies. This happens even as new scams continue to unfold, undermining the public’s trust in the banking, regulatory and law enforcement system.
Needless to say, the public is feeling cheated as law enforcement agencies are often caught napping. In less than a week’s time, new names – Nirav Modi, Mehul Choksi and allegedly Vikram Kothari – have added themselves to the fugitives list.
The Wire presents here the latest status of legal cases filed by Indian agencies to bring businessmen back to the country.
Jatin Mehta, chairman of Winsome Diamonds and Jewellery, a listed company, and group firm Forever, owes Rs 68 billion to 15 banks in India. He is now a citizen of Saint Kitts, an island country with whom India has no extradition treaty. Mehta has left few assets behind.
As The Wire has reported, Mehta is a close relative of industrialist Gautam Adani, considered close to Prime Minister Narendra Modi. Mehta’s son Suraj married Krupa, the daughter of Gautam Adani’s brother Vinod Shantilal Adani, in 2012.
Winsome first defaulted on loans in 2013. It cited $1 billion derivative losses suffered by its United Arab Emirates (UAE) clients as the reason for the default. The ED has asked Dubai to expedite its response to India’s letters rogatory (LR) relating to Mehta’s Winsome Group.
In 2016, India had sent LR to the UAE. CBI needs help from the UAE to verify Winsome’s explanation for its inability to repay Indian banks.
Here’s the sequence of transactions: Winsome had imported gold on the back of standby letters of credit given by Indian banks in favour of international bullion banks which supplied the gold. Winsome used the gold to make jewellery that was exported to 13 clients in Dubai. The idea was that Winsome would then pay back the banks once they received payments from the Dubai clients. These buyers, according to Winsome and Forever, never could pay up due to losses suffered in over-the-counter derivative bets.
According to investigations by the CBI, ED, Vijay Mallya diverted most of the Rs 90 billion he borrowed from a SBI-led consortium of lenders. The fugitive’s trial began in a London court last December. The trial is aimed at laying out a prima facie case of fraud against Mallya, who has been based in the UK since March 2016. The hearing is still continuing and is expected to conclude in the next few months.
Mallya’s lawyers went through a series of expert witness statements to establish that there are no grounds to force the liquor baron to return to India to face allegations of fraud involving his now-defunct Kingfisher Airlines.
His defence team, led by barrister Clare Montgomery, has questioned authenticity of the material submitted by the Crown prosecution service arguing on behalf of the Indian authorities, saying there are at least a dozen documents which read like an identical “template”. The ED has failed to produce Mallya in a Delhi court in a FEMA violation case.
The manner in which Mallya left the country has left many puzzled. As The Wire’s M K Venu wrote in 2016:
Shockingly, Mallya left India on a Jet Airways flight with nearly a dozen baggage items on March 2, which is also the day when the banks moved a special debt recovery court seeking an arrest warrant against him. The banks, suspecting Mallya may flee the country, asked for his passport to be seized.
Is this a mere coincidence?
Lalit Modi, former IPL commissioner, left India in 2010 following alleged financial irregularities in the Indian Premier League’s 2009 season. He has taken shelter in London. Indian security agencies say they are pursuing former IPL chairman but in May 2017, the ministry of external affairs said it had yet to submit a formal extradition request to the UK, an essential procedure for bringing Modi back to India. The ministry made the disclosure in response to an RTI filed by an Indian news agency.
The ED explained the delay, saying, “Before sending extradition request against the fugitive, it is necessary to file a charge sheet against him; that is yet to be submitted in court.” The Tamil Nadu police have not completed the investigations and, therefore, no charge sheet has been filed against Modi.
ED’s request for a red corner notice against Modi too has been ignored by the Interpol. In June 2015, many media houses reported that foreign affairs minister Sushma Swaraj had helped procure Lalit’s travel papers after his passport was cancelled. According to reports, she said that she had helped him on “humanitarian grounds”.
Sanjay Bhandari ran into trouble when several “classified” documents dealing with big-ticket defence procurements and plans were seized in an income tax raid on his premises in April 2016. Subsequently, the Delhi police registered an FIR under the stringent Official Secrets Act against Bhandari in October 2016. Later, the CBI also got involved after it was alleged that his firm had received 7,50,000 Swiss Francs from the Swiss Pilatus company in 2010.
But before he could be brought to justice, Bhandari managed to flee to London. In April 2017, it was reported that Interpol refused to issue a red corner notice (RCN) against the arms dealer in a major set back to the Delhi police.
Since then, the police have attached Bhandari’s properties worth over Rs 200 million, including four luxury cars. The ED too has seized his assets worth Rs 266.1 million for alleged FEMA violations. The I-T department has restrained Bhandari from disposing of properties abroad, including London and Dubai, and served an attachment order.
A Dubai court last December threw a wrench in the efforts of the CBI and income tax department to bring back to Indian corporate lobbyist Deepak Talwar, who is being probed for concealing income of more than Rs 10-billion as well as facilitating aviation contracts during the UPA regime, by restraining him from leaving the country.
Talwar, who was closely associated with the civil aviation, erstwhile Foreign Investment Promotion Board and infrastructure sectors, allegedly played key role in getting approvals for several Gulf-based airlines, according to investigative agencies.
The Dubai court’s order came on a complaint by one Rajendra Patel, a resident of Burj Dubai. The complaint related to a dispute over financial transactions between Patel and Talwar for their ‘commercial interests’ in Dubai.
Nirav Modi, Mehul Choksi
Nirav Modi and Mehul Choksi, who are the main accused in over Rs 110 billion Punjab National Bank (PNB) scam, have left the country and there is no official confirmation where they have gone. Other members of the Modi family too have gone missing.
According to an official statement, the ED has raided dozens of Modi’s premises and seized diamonds, gold and jewellery worth Rs 56.7 billion. On February 14, PNB said that it had discovered fraudulent and unauthorised transactions of Rs 113 billion at the Mumbai branch.
The income tax department has warned in an internal note that domestic banks could take a hit of more than $3 billion from loans and corporate guarantees provided to Modi and Choksi. Taxmen have seized 29 properties and 105 bank accounts linked to Modi.
Coming close on the heels of the Nirav Modi scam, another defaulter Vikram Kothari, the promoter of Rotomac Pen, was reported by PTI and other news outlets to have allegedly left India after defrauding public sector banks of Rs 8 billion. On Monday, Kothari denied speculation of his fleeing the country and on Tuesday he was arrested in Lucknow.
Rotomac has taken a loan of more than Rs 8 billion from over five state-owned banks – Allahabad Bank, Bank of India, Bank of Baroda, Indian Overseas Bank and Union Bank of India.
Last year, BoB declared Rotomac Global as “wilful defaulter”. Subsequently, the company moved the Allahabad High Court seeking removal of its name from the list of wilful defaulter.
On Monday, the CBI said it had registered a case against Rotomac Global in connection with an alleged “$454.39 million” loan scam. The case was registered on the back of a complaint filed by Bank of Baroda.
Published by arrangement with The Wire