Loan default: ED attaches Rs 172 Cr assets of diamond firm

ED today attached assets worth Rs 172 crore of a diamond and jewellery export firm in connection with its money laundering probe in a major bank default case involving over Rs 6,800 crore.
The agency, in a statement, said its zonal office here issued orders for provisional attachment of immovable assets, plant and machinery worth Rs 171.97 crore belonging to Winsome Diamonds and Jewellery Ltd (WDJL), its promoter Jatin Mehta and other group companies.
It said the agency was attaching these assets as the "proceeds of crime" in the form of jewellery were already exported to the UAE.
"Therefore, provisional attachment order was issued for attaching immovable properties as these represent value of such property," it said, adding the action was taken under the provisions of the Prevention of Money Laundering Act (PMLA).

While the firm has its registered office in the diamond city of Surat in Gujarat, it is headquartered in Mumbai.
As per ED, of the total Rs 6,800 crore of debt and loans, Winsome owes Rs 4,680 crore to a consortium of lenders led by Standard Chartered Bank. Its associate firm Forever Precious Jewellery and Diamonds Limited (FPJDL) owes another Rs 2,121.82 crore to a set of banks led by PNB.

"Ms WDJL, Ms FPJDL, its promoter Mehta had availed loans for the purpose of purchase of gold and diamonds from bullion banks (Bank of Nova Scotia, Standard Chartered Bank, London, Barclays Bank) and other related works. They availed fund based working capital limit and non-fund based limits from consortium of banks led by Standard Chartered Bank and Punjab National Bank.

"They used loan and exported diamond and gold jewellery to 13 foreign companies in UAE, represented and controlled by Haytham Salman Ali Abu Obaidah, a Jordanian national. However, these companies failed to remit the money towards the payment/realisation of exports and consequently WDJL and FPJDL claimed that they could not make payments to the bullion banks in time which made the bullion banks to invoke the Stand By-Letter of Credits (SBLC) issued by PNB and other banks.
"Thus, Mehta and his employee Directors of WDJL and FPJDL in criminal conspiracy with Obaidah diverted the funds to UAE and did not repay the outstanding of Rs 1,658.08 crore to PNB. The total amount of export proceeds in respect of all the banks which is outstanding is worth about Rs 6,863 crore with the 13 UAE buyers," the statement said.

The ED registered a PMLA case to probe this alleged loan fraud in 2014 based on a CBI FIR filed by PNB.
As troubles mounted and the company failed to service its debt, many banks got the company and promoter Mehta declared as 'wilful defaulters' as forensic audits showed the firm had allegedly siphoned off funds.
The case, like that of the Rs 9,000 crore alleged bank loan default by liquor baron Vijay Mallya, is being monitored at the top level of the central government including the Finance Ministry and the Prime Minister's Office.