PNB scam: Mehul Choksi diverted Rs 3,257 crore to foreign dummy firms, claim sources

ED sources claimed that over Rs 3,250 crore was diverted and deposited in the Gitanjali Group firms in the US by Choksi.

NEW DELHI: Fugitive diamond jeweller Mehul Choksi, wanted in the Rs 13,500-crore Punjab National Bank (PNB) fraud case, diverted over Rs 3,257 crore of the money raised from fraudulently obtained letters of undertaking (LOUs) and foreign letters of credit (FLCs) to overseas dummy firms, an informed source said on Tuesday.

The Enforcement Directorate (ED) source revealed that Choksi of the Gitanjali Group, who acquired the Antiguan citizenship, also highly inflated the prices of precious metals sold from his business outlets and diverted about $106 million to his nephew Nirav Modi and his father Deepak Modi.

The ED source, requesting for anonymity, said, "Over Rs 3,250 crore was diverted and deposited in the Gitanjali Group firms in the US, United Arab Emirates, Thailand, the United Kingdom, Hong Kong, Japan, Italy and Belgium." 

Earlier on Tuesday, Choksi in his first message from his hideout in Antigua denied allegations of wrongdoing and instead accused the ED of "illegally" attaching his properties.

In the video message, the fugitive diamantaire said that his Indian passport was suspended without giving him any opportunity to explain. A Red Corner Notice (RCN) against Choksi is pending with the Interpol. 

The ED in its charge sheet against Choksi had alleged that from 2015 onwards a part of the funds was used for repayment of dues of various banks. On scrutiny of the bank account details of the said Indian entities, it was found that huge amounts of debits have been allegedly made from the accounts of these entities maintained with the PNB to the overseas companies of the Gitanjali Group.

"During the investigation, it was revealed that transfer of funds was made to the 4Cs Diamonds Distributors, Crown Aim Ltd, Shangyang Gong Si Ltd, Taipingyang Trading Ltd, Abecryst (Thailand) Ltd, and Asian Diamond and Jewellery FZE from the accounts of the Indian entities.

The source revealed that the Gitanjali Group owner also involved Nirav Modi, who is also wanted in the case by the Indian investigation agencies, using several dummy companies to rotate funds. 

The source said that Choksi diverted $56.12 million of loan money to his nephew and about $50 million to Nirav Modi`s father Deepak Modi.

In its charge sheet, the financial probe agency alleged that Choksi used several dummy companies for rotating his transactions. 

"Under this arrangement, the origin of sale transactions and final destination used to be any of the Gitanjali Group of companies. And for in-between transactions, dummy companies were used for layering purpose wherein only sale or purchase bills were created and no movement of goods took place. Choksi has been doing this to project inflated turnover to avail higher banking facility," the charge sheet said.

The ED claimed that Choksi used to fix the value of goods without applying economic rationale. "The goods in question were either of low value or poor quality and were not commensurate with the price or value fixed by him," the ED said.

The charge sheet alleged that these goings-on were confirmed by Gitanjali Group`s Vice President Vipul Chitalia in his statement to the agency under the Prevention of Money Laundering Act.

The agency said that the proceeds of crime of money laundering were partly remitted back to the Gitanjali Group of companies in India in the guise of export-import transactions for settling earlier credit liabilities.

Choksi and Nirav Modi are under probe by both the CBI and ED. The ED had on May 24 and 26 filed the charge sheets against both. The court took cognisance and issued non-bailable warrants against them. 

Nirav Modi left India along with his family in the first week of January, weeks before the scam was reported to the CBI. His wife Ami, a US citizen, left on January 6 and Choksi on January 4.