PNB scam: Govt intervenes in Nirav Modi firms' bankruptcy proceedings in US

Nirav Modi-owned Firestar Diamond Inc filed for bankruptcy in the US on February 27

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The government has intervened in the bankruptcy proceedings of Nirav Modi firms in the US to protect the interests of Punjab National Bank (PNB), Union minister P P Chaudhary said, amid multi-pronged efforts to deal with the nearly Rs 130 billion (Rs 13,000 crore) scam.

Diamond merchants Nirav Modi and his uncle Mehul Choksi are alleged to have perpetrated the country's biggest banking sector scam at Punjab National Bank, mainly by way of issuance of fraudulent Letters of Undertaking (LoUs).

Against the backdrop of a multi-agency probe into the case, Chaudhary said that some Nirav Modi firms filing for bankruptcy in the US would jeopardise the interests of Punjab National Bank.

The Minister of State for Corporate Affairs noted that committing of fraud and violation of Indian laws by these firms necessitates booking of the accused in India.
 

"Since the investigation against Nirav Modi led firms, ie Firestar Diamond and other firms, is still going on in India for committing fraud against the Punjab National Bank, the filing of bankruptcy by these firms in the US would jeopardise the interest of the Indian bank," he told PTI in an interview.

Chaudhary, who is the Minister of State for Law and Justice, said, "we have intervened in the bankruptcy proceedings in the US to safeguard our interests".

On February 27, Nirav Modi-owned Firestar Diamond Inc filed for bankruptcy in the US.
 

Last month, senior government officials had said the effort would be to try stall the bankruptcy proceedings so that the company's assets are not liquidated before completion of the probe into the scam.

On February 23, the National Company Law Tribunal (NCLT) had restrained more than 60 entities, including Nirav Modi, Mehul Choksi, various individuals, companies, and limited liability partnership firms, from selling their assets.

The Serious Fraud Investigation Office is probing 107 companies and seven limited liability partnerships (LLPs) linked to Nirav Modi and Mehul Choksi groups with regard to the scam.
 

The minister said the SFIO would submit its report within six months.

Among other agencies, the Central Bureau of Investigation and the Enforcement Directorate are also investigating the fraud.