The Enforcement Directorate today filed its first chargesheet in the Punjab National Bank Ltd. fraud case involving diamantaire Nirav Modi and associates.
The law enforcement agency stated that over Rs 6,400 crore of bank funds were laundered abroad to dummy companies by Modi and others. It alleged that a sum of $50 million, out of these monies, was “diverted” to Modi's father Deepak Modi who is reported to be based in Antwerp, Belgium.
Officials said that a near 12,000-page chargesheet or prosecution complaint has been filed before a special court in Mumbai under various sections of the Prevention of Money Laundering Act. “The court will soon take cognisance of the charge sheet,” a senior official said.
Twenty four people have been accused in the chargesheet, filed under section 45 of the PMLA, including Nirav Modi, his father, brother Neeshal Modi, sister Purvi Modi, brother-in-law Mayank Mehta and the designer jewellers' firms--Ms Solar Exports, Stellar Diamonds and Diamonds R Us.
These firms and Modi’s Firestar group of companies had fraudulently obtained Rs 6,498 crore through Letters of Undertaking (LoUs) issued by the Punjab National Bank, Brady House branch in Mumbai.Enforcement Directorate statement
The funds obtained by the three were “partly utilised for payment to various overseas companies and also for offsetting earlier LOUs”, according to the chargesheet.
“It was revealed during investigation that the payments were made to 17 overseas entities in Hong Kong, Dubai and the U.S. since 2011 in the guise of export and import,” the agency said in its charge sheet.
How The Fraud Was Carried Out
The probe also revealed that the overseas firms were dummy companies of Modi. The directors and shareholders of the companies were dummies too as they were either current or former employees of the Firestar group of companies. ED said they were working on directors by Modi and his other trusted officials Shyamsunder Wadhwa, Aditya Nanavati, Mihir Bhansali and Saju Poulose.
The modus operandi for money laundering was to show manufacturing activities in these dummy overseas companies by over-valuing invoices and inflating balance sheets. “The export and import was also not genuine and was just rotational transactions. The jewellery exported from India was dismantled and diamonds and pearls were taken out and the gold and silver was sent for melting,” the agency noted.
The melted metals were then re-exported to Dubai and India. The diamonds and pearls were also separately re-exported to India.
The whole process was carried out without any substantial value addition and was only meant to inflate the turnover of Indian companies so that they get maximum credit facilities from the banks.
Till date, diversion of the proceeds of crime to the extent of $629.21 million has been traced to several group companies, relatives, other dummy companies under Nirav Modi’s control.Enforcement Directorate
ED has sent letters rogatories to 15 countries till now for seeking evidences.
The agency will soon file a second charge sheet against Modi's uncle and jeweller Mehul Choksi and his businesses, who are also accused in this case. The ED had registered an FIR in this instance on February 14. The CBI had also filed two charge sheets in this case early this month.
Nirav Modi, who is absconding and has not joined the probe till now, is being investigated under various criminal laws after the over Rs 13,000 crore fraud came to light earlier this year. Both Modi and Choksi are said to have left the country before criminal cases were lodged against them.