Investigating agencies suspect that diamond merchant Mehul Choksi has started speaking up as his summons before the court under the Fugitive Economic Offenders Act approaches close. Wanted in the Punjab National Bank fraudulent LoUs case, Choksi has been directed to appear before the court on September 26. In case he fails to comply with the court directive, his assets can be confiscated and disposed.
The Enforcement Directorate (ED) moved applications before a Mumbai special court, requesting Choksi and his nephew Nirav Modi be declared fugitive economic offenders, and if they fail to appear in response to court summons, their assets located in India, UK and UAE be confiscated. Taking cognisance, the court summoned Modi and Choksi to appear before it on September 25 and 26. The ED claims to have found a significant part of the entire money trail behind the PNB scam. In Choksi's case, it has so far established a money trail in the US, the UAE, Thailand, UK, Hong Kong, Japan, Italy, and Belgium, amounting to £325.7 million. It has also identified 16 identities from which funds were diverted. Six of them are based in the US, while four are in the UAE.
It was unearthed lately that PNB funds were also diverted to US-based A Jaffe and Firestar Diamond Inc in the form of LoUs, to Firestar USA, Belgium and Hong Kong from six dummy companies in Hong Kong, and to jeweller and nephew Nirav Modi, his father Deepak Modi and sister Purvi via the dummy firms.
Sources said the Hong Kong and UAE-based companies were controlled by Choksi through dummy directors. ED alleges that he knew about the fraudulent means used to get credit facilities from the PNB without proper collateral and on nominal interest rates. A senior official said, “Investigations revealed that there was no manufacturing activity in any of the overseas companies located in Hong Kong and the UAE, only bogus import/export and sale among the group companies were carried out. The import/export invoices were overvalued to get more credit.”
The official added, “The transactions were rotational. The jewellery exported from India was dismantled and diamonds/pearls were taken out of it. The gold/silver was melted and re-exported to Dubai or India. Diamonds/pearls were also separately re-exported to India. The whole process was only for inflating the turnover of Indian companies, to maximise credit worthiness.”
