CBI books jeweller Nirav Modi in a Rs 2.8-bn cheating case related to PNB

Banks said his firm fraudulently issued eight LOUs totalling $44.2 million for Hong Kong-based Allahabad Bank and Axis Bank

The CBI has booked billionaire diamond merchant Nirav Modi, his brother and wife and a business partner for allegedly cheating Punjab National Bank of over Rs 2.8 billion during 2017, officials said.

The CBI has acted on a complaint from the Punjab National Bank, which alleged that Modi, his brother Nishal, wife Ami and Mehul Chinubhai Choksi, all partners of Diamon R US, Solar Exports, Stellar Diamonds, were in conspiracy with officials of the bank and cheated it, causing "wrongful loss", the officials said.

The response to an email seeking the company's comments is awaited.

"The public servants committed abuse of official position to cause pecuniary advantage to Diamond R US, Solar Exports, Stellar Diamonds and wrongful loss of Rs 2.8 billion to Punjab National Bank during 2017," the FIR has alleged.

The CBI has registered the FIR under the Indian Penal Code (IPC) sections related to criminal conspiracy, cheating and provisions of Prevention of Corruption Act against the four, an official said.

The bank has alleged in the complaint that a fraudulent issuance of Letters of Undertakings (LOU) took place on January 16, 2018 for and on behalf of the accused firms, which approached the bank and presented a set of import documents to the branch with a request to allow buyers' credit for making payment to overseas suppliers.

The bank officials requested the firms to furnish 100 per cent cash margin for LOU for raising buyers' credit. The firms contested this, saying that they availed this facility in the past also, the complaint, now a part of the FIR, has alleged.

However, branch records did not reveal details of any such facility granted to the said firm, it said.

The bank claimed that its deputy manager (now retired) Gokul Nath Shetty and Manoj Kharat had fraudulently issued LOUs without following prescribed procedure by obtaining required request applications, documents and approval of authorities and without making any entries in the bank's systems.

The banks said they fraudulently issued eight LOUs totalling $44.2 million, equivalent to Rs 2.8 billion, for Hong Kong-based Allahabad Bank and Axis Bank.

The bank alleged that it is making an "in depth" inquiry to find outstanding LOUs which have not been detected in its system.

"While tracing old entries, it transpired that buyer's credit based on fake LOUs might also have been paid through NOSTRO A/C," it alleged.

Claiming that public money to the tune of Rs 2.8 billion seems to have been "embezzled" by commiting fraud, the bank asked the CBI to register the case.

Mehul Choksi clarifies:

In a statement, Mehul Chinubhai Choksi has clarified that In the firm Diamond R US, he retired as Partner in 1999. For the said period under scrutiny and for more than a decade prior, He was not involved in any manner with the said firm.

In the other two firms — Solar Exports and Stellar Diamonds, Choksi, the statement said, has never had anything to do with them in any capacity and he is not involved in any dealings that these firms may have had with any banks or financial institutions.

The statement said Choksi’s name should not be dragged into the as it will adversely affect the goodwill and reputation that he has built over the years.