The Enforcement Directorate investigating the over Rs 11,000-crore PNB fraud case approached a Mumbai court seeking issuance of Letters Rogatory (LRs) for obtaining information about the overseas businesses and assets of diamantaire Nirav Modi.
“It is an application for issuance of LR under the Prevention of Money Laundering Act (PMLA) for recovery/seizure of proceeds of crime and collection of documents, evidence lying in Hong Kong, USA, UK, UAE, South Africa and Singapore which are required in connection with the investigation,” the ED said in its plea before the PMLA court.
Letters Rogatory are a request from a court of a sovereign nation to a court of another sovereign nation. Judge M S Azmi heard the arguments of special public prosecutor Hiten Venegaonkar.
The ED told the court that Nirav Modi established various firms, including Diamond R US, Solar Exports, Stellar Diamond, Firestar Diamond, and became an integrated diamond manufacturer who bought rough diamonds, sold polished ones and other stones and also designed jewellery.
His business consisted of trading in rough and polished diamonds, private label jewellery manufacturing and sale in the name and style of Nirav Modi and Firestars as well as production of unlabelled jewellery for third parties, the ED said.
“He spread his business operations in various countries, including Hongkong, USA, UK, UAE, South Africa and Singapore. He had apparently got issued multiple high value Letters of Undertaking (LoUs) in favour of his firms/ companies from Punjab National bank which resulted in disbursement of funds as per the SWIFT messages sent by PNB,” the ED said in its plea before the court.
“It was later found by the bank that the same were issued fraudulently since there was no record of the said LoUs in the banks records”, it said.
SWIFT (Society for Worldwide Interbank Financial Telecommunications) is a messaging network for securely transmitting instructions for all financial transactions through a standardised system of codes.
The ED said that by this criminal act of cheating and conspiracy, the accused generated huge proceeds of crime amounting to Rs 6,498 crore which had been siphoned off by them and thereby laundered and amalgamated in mainstream financial system to project it as untainted property.
“Certain part of the proceeds of crime involved in money laundering are reasonably believed to be parked in (countries abroad),” the application said.
On January 31, the CBI had registered an FIR against Nirav Modi, his companies, and diamond jeweller Mehul Choksi. Later, the ED also started its probe.
The CBI has so far arrested Vipul Ambani, the president (finance) of Nirav Modis Fire Star Diamond, Kavita Mankikar (executive assistant and authorised signatory of three firms — Diamond R US, Stellar Diamond, Solar Exports), Arjun Patil (senior executive, Firestar group) and Rajesh Jindal, the then head of the Brady House branch of PNB.
The others arrested are: Bechhu Tiwari, the then chief manager in the Forex department of PNB, Yashwant Joshi, the Scale II manager in the Forex department, Praful Sawant, the Scale-I officer handling the exports section, Gokulnath Shetty, the then deputy manager (now retired) of PNB, Manoj Kharat, a single window operator of PNB, and Hemant Bhat, the authorised signatory of Nirav Modis company.
Among those arrested in connection with Choksi’s firms are Nakshatra group and Gitanjali group CFO Kapil Khandelwal and Gitanjali group manager Niten Shahi.
The FIR had listed eight fraudulent transactions worth over Rs 280 crore, but based on further complaints from the bank, the CBI said the quantum of amount in the first FIR is over Rs 6,498 crore, involving 150 LoUs allegedly issued fraudulently by Shetty and Kharat.
The remaining 150 fraudulent LoUs worth over Rs 4,886 crore issued for Gitanjali group of companies were part of the second FIR registered earlier this month by the agency against Choksi and his companies Gitanjali Gems, Nakshatra Brands and Gili.