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CBI registers fresh Rs 321 crore case against Nirav Modi

CBI registers fresh Rs 321 crore case against Nirav Modi

Nirav ModiNew Delhi : The CBI on Thursday said that it has registered a fresh case against diamantaire Nirav Modi for causing a loss of Rs 321 crore to Punjab National Bank (PNB) by availing different credit facilities between 2013 and 2017.

According to a Central Bureau of Investigation official, the case was registered after the bureau received a fresh complaint from the PNB on Sunday.

Former finance president of Nirav Modi’ Firestar Diamonds International Ltd. Vipul Ambani, chief finance officer Ravi Gupta, other directors and officials of the company, and unidentified public servants of the bank were also named in the complaint, they said.A

This is the second CBI case in which Nirav Modi has been named by the investigating agency.

In its complaint to the CBI, the bank alleged that during its internal investigation it had spotted circular transactions between the diamantaire promoted partnership firms namely — Solar Exports, Stellar Diamonds and Diamond R Us — and Firestar group of companies.

The head office of the bank had declared the accounts of Firestar Diamonds and Firestar International as fraud and reported it to the Reserve Bank of India on Sunday, it said.

Nirav Modi, along with his uncle Mehul Choksi of Gitanjali Group, has been accused of defrauding the PNB of Rs 12,600 crore, with Rs 1,300 crore being added to the fraud kitty on February 26.

The CBI had filed the first FIR in the scam on February 14 against Nirav Modi, his wife Ami, brother Nishal, Choksi and his firms Diamond R US, Solar Exports and Stellar Diamond.

Modi, his family and Choksi had left the country in early January.

The CBI filed a second FIR on February 15 over a Rs 4,886.72-crore fraud against Choksi’s Gitanjali Group.

To date, the Enforcement Directorate (ED) has carried out searches at over 198 locations across the country and seized properties worth nearly Rs 6,000 crore, while the CBI has arrested at least 19 persons in the case so far.

—IANS

Chidambaram aided Choksia, Nirav Modi with 80:20 scheme: BJP

Chidambaram aided Choksia, Nirav Modi with 80:20 scheme: BJP

Ravi Shankar Prasad

Ravi Shankar Prasad

New Delhi : Amid attacks from the Congress over the Rs. 12,600-crore PNB scam, the BJP on Monday accused former Finance Minister P. Chidambaram of aiding jewellers Mehul Choksi and Nirav Modi — main accused in the multi-crore bank fraud case — through an 80:20 gold import scheme.

The Bharatiya Janata Party BJP) also targeted Congress chief Rahul Gandhi and sought answers from him on the issue.

Talking to reporters here, BJP leader and Union Minister Ravi Shankar Prasad said that Chidambaram gave his “blessings and benefits under the 80:20 scheme” to seven private jewellers on May 16, 2014, the day the results of Lok Sabha polls were announced.

“These seven jewellers included Geetanjali and Star jewellers,” Prasad said.

He said the 80:20 gold import scheme was started in August 2013 under the UPA government and was repealed by the Narendra Modi government three months after it came to power.

Prasad said earlier only Metals and Minerals Trading Corporation and public sector undertakings had the right to import gold, but that was changed.

“There was round-tripping under the scheme,” he alleged.

The 80:20 scheme was brought for nominated banks/ agencies/ entities to “rationalise” import of gold in any form to tame the current account deficit.

Prasad said exit polls had predicted that the Congress would lose elections and Chidambaram would not have been Finance Minister after the results were out.

“It was expected of the then learned Finance Minister that he will follow constitutional norms (of not taking important decisions),” Prassad said.

“Chidambaram should say, Rahul Gandhi should say why benefits were passed on to seven private companies under 80:20 scheme on May 16. The nation wants to know,” he asked.

He said Chidambaram’s order was subsequently cleared by the Reserve Bank of India on May 21.

“Mr. Chidambaram, is it ‘jumla’ or corruption? We want that real picture of Chidambaram should come before people. Mr. Chidambaram, please reply is it jumla, blatant favouritism, malafide conduct or rampant corruption?” Prasad said.

He alleged that the Congress was trying to spread misinformation about and fear against the BJP among people.

“Congress should reply who were the people lobbying for Geetanjali and what was the cut?” he said.

Prasad also targeted former Prime Minister Manmohan Singh over the increase in stressed assets of banks under the UPA government.

He said that the total advance given by banks in 2008 was Rs 18.06 lakh crore which rose to Rs 52.15 lakh crore in March 2014.

Prasad said that stressed assets of banks were pegged at 36 per cent in March 2014 but these subsequently rose to 82 per cent.

“Several times the real picture was not allowed to come on bank records during the UPA rule. The economic structure of the country was shattered by the Congress,” he said.

The Minister stressed there had been no NPAs (non-performing assets) in the loans given under the National Democratic Alliance (NDA) government.

“Under the so-called economist Prime Minister Manmohan Singh, the entire banking system was completely sought to be derailed because of interventions, because of pressures, because of patronage,” Prasad said.

The Congress has been targeting the government, including Prime Minister Narendra Modi, in the Rs 12,600-crore PNB bank fraud case and seeking answers from then over Nirav Modi and Mehul Choksi being able to leave the country.

—IANS

PNB not shown as creditor in US bankruptcy filing by Nirav Modi companies

PNB not shown as creditor in US bankruptcy filing by Nirav Modi companies

Firestar DiamondBy Arul Louis,

New York : The Punjab National Bank (PNB) is not shown as a creditor in the bankruptcy documents filed in a court here by three companies affiliated with Nirav Modi, who has been accused in a $2 billion-scam involving the nationalised financial institution.

But the document acknowledges that the filing of criminal complaints by PNB regarding allegations of “unauthorised loans” to Nirav Modi and affiliated foreign companies were the “events leading” to the filing of the bankruptcy petition.

The only banks mentioned as creditors are HSBC and Israel Discount Bank (IDB), which have outstanding loans totaling $20 million to two of the companies. The IDB’s revolving credit facility is guaranteed by Modi personally, as well as by two other companies, the document said.

However, tying up the three companies in bankruptcy proceedings would place hurdles for PNB to go after the Nirav Modi’s assets in these companies.

“In most instances, the filing of the bankruptcy case automatically stays certain collection and other actions against the debtor and the debtor’s property,” warns a note from the authorities that is attached to the bankruptcy documents. “If you attempt to collect a debt or take other action in violation of the Bankruptcy Code, you may be penalised.”

The three companies, — Firestar Diamond, Inc. (FDI); Fantasy, Inc. (FI), and A Jaffe Inc. (AJI) — filed for bankruptcy protection in the United States Bankruptcy Court for Southern New York on Monday.

The bankruptcy petition documents, obtained by IANS from the court system, show a maze of inter-connected ownerships that finally lead the three companies through several subsidiaries to Nirav Modi via Hong Kong.

Mihir Bansali, who is shown as the president and sole director of the three companies seeking voluntary bankruptcy, signed the main document for the bankruptcy petition.

On Thursday, the Nirav Modi jewelry showroom on New York’s Madison Avenue in the middle of high fashion outlets was closed, with the main entrance locked and shades pulled over the windows.

It was not possible to ascertain which company owned the showroom or why it was shut.

The three companies have petitioned under the Chapter 11 of the United States Bankruptcy Code, which permits them to operate while they reorganise their operations.

Their filing claimed that the reason for seeking bankruptcy protection was to “preserve the going concern value of their businesses and effectuate a sale or other transaction” for their brands to continue. This implies that they were not under direct financial distress.

They admitted that vendors were reluctant to continue doing business with them and some customers have begun to exploring other suppliers following the “negative publicity” that has impaired their operations and “created a great deal of uncertainty and confusion in the market.”

The government actions in India disrupted their supply chain, the filing added, was a reason for the bankruptcy filing.

They said they are trying to “reassure their customers and vendors that they were committed to carrying on their business and that swift action was being taken to mitigate the damage caused by the actions in India”.

According to Bansali’s document, FDI is owned by another US company, Firestar Group, Inc. (FGI), which is a wholly owned subsidiary of a US company, Synergies Corporation, which is a subsidiary of Honk Kong-based Firestar Holdings Limited (FHL) that is ultimately owned by Firestar International Limited (FIL), an Indian corporation whose majority shareholder is Nirav Modi.

FI is a subsidiary of FDI and 95 per cent of AJI is owned by Synergies.

Bansali is also the president and sole director of FGI and Synergies. Ajay Gandhi is shown as the secretary and chief financial officer for the three debtors, as well as FGI and Synergies.

As of Wednesday, an IANS search of court databases did not find any filings for FGI or Synergies.

The balance sheet as of last week filed in the court showed that Nirav Modi Inc owed $11.016 million to AJI and $1.767 million to FDI.

Synergies is owed $10.812 million by AJI and $7.941 million by FDI, while FHL is owed $4 million by AJI and $4.05 million by FDI, according to the balance sheet.

The filings said that FDI and FI have about $90 million of annual sales and their clients include Zales, Kay’s, Jared’s, COSTCO, Sam’s Club, Macy’s, JC Penney and US military bases.

AJI, it said, specialises in bridal jewelry and it had double digit sales growth for the last three years and were projected to reach $23 million in fiscal 2018, the document said.

Bansali asserted that they have seen “strong” early interest in purchasing some or all of their business operations.

(Arul Louis can be reached at arul.l@ians.in)

—IANS

Three fresh cases of banking fraud reported, Rahul attacks PM

Three fresh cases of banking fraud reported, Rahul attacks PM

Rahul Gandhi and Narendra ModiNew Delhi : Close on the heels of a massive Rs 11,300 crore PNB scam, three fresh financial frauds have come to light including the alleged involvement of a Delhi-based jeweller, who has been accused of defrauding the Oriental Bank of Commerce (OBC) to the tune of about Rs 390 crore through Letters of Credit.

The fresh exposure provided Congress President Rahul Gandhi an opportunity to attack Prime Minister Narendra Modi, saying that like Vijay Mallya and Nirav Modi, these promoters have also disappeared while the government looked the other way.

On Thursday, the Central Bureau of Investigation (CBI) registered a case against Delhi’s Karol Bagh-based diamond jewellery exporting firm Dwarka Das Seth International for an alleged bank loan fraud of Rs 389.85 crore involving the Oriental Bank of Commerce (OBC).

The agency on Wednesday filed a case against businessman Amit Singla and others on a complaint of the Bank of Maharashtra (BoM) of criminal misappropriation of a loan he had taken through forged documents.

The same day, the agency also filed a case against Inder Chand Chundawat, the then Senior Branch Manager in the Punjab National Bank’s (PNB) Barmer office in Rajasthan, for alleged abuse of his official position by depositing various government subsidies to the tune of Rs 1.57 crore in a fictitious account. The official was suspended following an internal inquiry.

Last week, the banking sector was rocked by major financial frauds — involving Rs 11,300 crore by diamantaire Nirav Modi and Rs 3,695 crore by Rotomac owner Vikram Kothari — surfaced in which the CBI has filed cases and made several arrests.

After the PNB and the Bank of Baroda, the OBC, BoM and Barmer office of the PNB rushed to the CBI with their complaints of fraud, leading to the agency filing three separate cases.

The OBC has alleged that it was defrauded by Dwarka Das Seth International and its owner Sabhya Seth. The loans turned into non-performing assets (NPAs) way back in 2014, but the bank approached the agency on August 16 last year, after the company had folded up and Seth fled the country.

The CBI has started tracing India-based directors and partners of the company.

The OBC complaint has alleged that Dwarka Das Seth International took loans by way of letters of credit and other such credit facilities for gold jewellery export/import between 2007 and 2012 but failed to pay back.

A probe by the bank found that the company had indulged in round-tripping of funds through fictitious companies abroad and had utilised funds by discounting bills based on the letters of credit of foreign banks, which were either non-existent or had negative ratings.

Similarly, BoM has approached the CBI to lodge a loan default complaint against a Delhi businessman Amit Singla. The loan had turned into an NPA in 2013 and the bank has even sold a property kept as collateral to recover its dues, sources said.

The BoM’s FIR names Singla, the proprietor of Delhi-based Ashirwad Chain Co, loan guarantor Roshan Lal Bhalotia, property valuation firm Tech Mach International and unknown officials of the bank.

It is alleged that Singla and his company took loans of Rs 9.5 crore through cash credit facility from the bank between 2010 and 2012. The accused allegedly submitted three properties in Delhi and Haryana as collaterals. The properties, at the time of taking the loan, were valued at over Rs 18 crore by Tech Mach International.

But, after the loans turned into NPAs, the actual market value of the properties were found to be only Rs 2.5 crore. One of the properties, a double-storied house owned by Roshan Lal in Rohtak, Haryana, was valued at Rs 4.85 crore while sanctioning the loan. When the bank sold it off to recover its dues, it fetched only Rs 73 lakh.

Similarly, a commercial property owned by the accused at Chandni Chowk in Delhi was valued by Tech Mach at the time of disbursal of the loans at Rs 4.95 crore, but it was actually worth Rs 31 lakh only. Tech Mach was later removed from the panel of valuers by the bank.

In the complaint, the BoM said: “The overvalued valuations were deliberately given in connivance with the borrowers and the guarantors … to fraudulently induce the bank to finance the borrower.”

The FIR also alleged that Singla had submitted inflated stock audit reports and balance sheets, apart from diverting the loans to sister concerns.

In the light of the emergence of three fresh cases of fraud, Rahul Gandhi attacked the Prime Minister.

“Under Modiji’s ‘Jan-Dhan Loot Yojana’, another scam! 390 crore, involving a Delhi-based jeweller. Same Modus operandi as Nirav Modi. Fake LOUs,” wrote Gandhi in Twitter.

“Predictably, like Mallya and Nirav, this promoter too has disappeared while the Govt looked the other way,” he added with hashtag #ModiRobsIndia.

Union Finance Minister Arun Jaitley said on Saturday the discourse needed to move on from ease of doing business to that of Indian industry’s responsibility to become ethical in the way it does business.

He said political corruption at the Centre had “reduced significantly” after the ruling NDA government ended the administration’s discretionary powers in awarding contracts and allocation of resources.

The sale of electoral bonds from next week, he added, would be a decisive step in cleaning up the system of political funding in the country.

On Friday, Modi spoke about the bank fraud for the first time at the ET Global Business Summit saying government would take “stern action” against irregularities.

—IANS

Industry has to introspect on doing ethical business: Jaitley

Industry has to introspect on doing ethical business: Jaitley

Arun Jaitley

Arun Jaitley

New Delhi : In light of the Rs 11,300 crore Punjab National Bank (PNB) scam allegedly involving diamantaire Nirav Modi, Union Finance Minister Arun Jaitley said on Saturday that the discourse needed to move on from ease of doing business to that of Indian industry’s responsibility to become ethical in the way it does business.

He also said political corruption at the Centre had “reduced significantly” after the ruling NDA government ended the administration’s discretionary powers in awarding contracts and allocation of resources. The sale of electoral bonds from next week, he added, would be a decisive step in cleaning up the system of political funding in the country.

Noting how India had moved into the top 100 countries in the World Bank’s Ease of Doing Business ranking, Jaitley said the measures that helped the country’s ranking had been the government’s responsibility.

“Ease of doing business was government’s responsibility. There is the need to transform from this to industry responsibility in the habit of ethical business,” the Finance Minister said at the ET Global Business Summit here.

“Indian business has to learn to do ethical business. Those who deviate from this will face the consequences not only in terms of business and civil law, but the criminal law too will be transformed to allow extreme action against such delinquents,” he said.

“Rather than always have a close look at what government’s are doing, Indian industry needs to look inwards and to a fair bit of introspecting,” Jaitley said.

In a reference to the massive accumulated non performing assets (NPAs), or bad loans, of state-run banks that have crossed the staggering level of Rs 7 lakh crore, he added that the “unethical concept that money may or may not be returned has to come to an end”.

Without naming the PNB scam, Jaitley said the recent bank frauds had glaringly highlighted the failure of both internal and independent auditors, as well as the inadequate supervision by regulators.

Indian industry, in collusion with chartered accountants, had for years been employing various ways like creating shell companies to “round trip” money, he added.

Jaitley also said that electoral bonds, which are due to start sale from March 2 will transform the total anonymity in the existing political funding system, to one where it becomes “100 per cent transparent” because such bonds can only be bought through the banking system with “clean money” and the funding would be reflected in the books of both donor companies and political parties.

—IANS