The Enforcement Directorate is set to move a special Mumbai court seeking the 'fugitive economic offender' tag for Gitanjali Gems owner Mehul Choksi and confiscate his assets worth over Rs 60 billion in the $2 billion PNB scam.
The special Prevention of Money Laundering Act court on Tuesday took cognisance of a criminal prosecution compliant — charge sheet — filed by the agency against Choksi and 13 others on June 28 under the anti-money laundering law.
Official sources said the agency will soon move the court seeking to label Choksi a fugitive economic offender on the basis of the chargesheet. The agency's move will be on the lines of a plea it made against liquor baron Vijay Mallya in a Rs 90-billion bank loan fraud case.
The ED will file an application under the recently-promulgated Fugitive Economic Offenders Ordinance, which empowers it to confiscate “all linked assets” of an absconding loan defaulter, the sources said adding that a similar plea will be made against diamantaire Nirav Modi.
The agency had charged Choksi and his three firms — Ms Gitanjali Gems, Ms Gili India, and Ms Nakshatra Brand — to have obtained “fraudulently issued letters of undertaking to the tune of Rs 30.11 billion and obtaining credit limits of foreign letters of credit enhanced to the tune of Rs 30.86 billion.” The total proceeds of crime in this case is Rs 60.97 billion, the ED had claimed in its charge sheet.
The agency had said its investigation has revealed that the “goods exported from India (by Choksi’s firms) were of abysmally low quality but the value was highly inflated.” “The valuation of the export/import goods was used to be decided by Choksi," it said.
“Books of Gitanjali group were also manipulated by using third party remittance system and fabricated debtors were used to be created in order to enhance the drawing power for continuation or enhancement of credit limits,” the ED said.
During investigation, the ED charge sheet said, it came to light “that funds were also diverted from Dubai to several overseas subsidiaries of Gitanjali group in guise of loan repayment, loan, advances among others.”
Choksi and his nephew Nirav Modi are being investigated by the ED and the CBI in an alleged fraud case relating to the Punjab National Bank after it was detected that they allegedly cheated the bank of more than Rs 134 billion with the purported involvement of a few of its employees.
The scam, which reportedly began in 2011, was detected in January this year, after which PNB officials reported it to the probe agencies.
Two criminal complaints were filed by the ED in these instances after taking cognisance of CBI FIRs.
The Fugitive Economic Offenders Bill, 2018 was introduced in the Lok Sabha on March 12 and the Union cabinet on April 21 approved the ordinance. President Ram Nath Kovind gave his assent to promulgate it a day later.
"A Fugitive Economic Offender is a person against whom an arrest warrant has been issued in respect of a scheduled offence and who has left India so as to avoid criminal prosecution, or being abroad, refuses to return to India to face criminal prosecution," the government had said.
Cases of frauds, cheque dishonour or loan default of over Rs 1 billion would come under the ambit of this ordinance.
The government has said the ordinance offers necessary constitutional safeguards in terms of providing hearing to the person through counsel, allowing him time to file a reply, serving notice of summons to him, whether in India or abroad and appeal before the high court.