PNB fraud: ED seizes jewellery worth Rs 85 cr in Choksi case
New Delhi: The ED on Thursday seized over 34,000 pieces of jewellery valued at Rs 85 crore in connection with its ongoing probe against absconding businessman Mehul Choksi who is accused along with his diamantaire nephew Nirav Modi of defrauding the Punjab National Bank (PNB) of over Rs 1,300 crore, an official said.
The seized jewellery was brought from Dubai and recovered during a search at Bharat Diamond Bourse, the world’s largest diamond bourse located in Mumbai.
“A stock of 34,000 pieces of jewellery was lying in the office of Choksi’s Gitanjali Ventures DMCC situated in Dubai. When the stock was brought to India and reached at the strong room of Bharat Diamond Bourse on May 10, the ED officials reached there with a warrant and seized it,” an Enforcement Directorate (ED) statement said.
The ED’s move is part of its money laundering probe against Choksi, who left the country days before a case of fraud was registered against him and his India-based Gitanjali group of companies — Gitanjali Gems Ltd, Nakshtra Brands Ltd, Gili India Ltd — by the Central Bureau of Investigation (CBI) in February following a complaint by the PNB.
Based on the CBI FIR, the ED registered a case against Choksi who defrauded the bank by illegally issuing Letters of Undertakings (LoUs) and Foreign Letters of Credit (FLCs).
Choksi in connivance with PNB’s Mumbai-based Brady House branch officials managed to issue unauthorized LoUs aggregating to Rs 3,032.17 crore and FLCs aggregating to Rs 3,106.56 crore in the name of Gitanjali group and the funds so raised for payment of import bills have not been utilised for such purposes, said the ED statement.
Gitanjali group has many overseas subsidiary and shell companies which were used by Choksi for circular trading, said the statement, adding Choksi had devised a modus operandi under which the Indian entities of his firms were importing unfinished goods and raw material like diamonds and pearls from his overseas entities situated mainly in Hong Kong and the United Arab Emirates (UAE).
“The same goods were shown to be processed and made into jewellery and again exported by the Indian entities of Choksi to his overseas entities. After dismounting diamonds, colour stones and pearl from the jewellery, gold or silver was sent for melting and converted into bullion and sent back to India directly or through Dubai.
“While rotating such transactions, sometimes there were one step transaction and sometimes two or three step transactions depending upon the instructions received.”
The overseas companies which were mostly used for routing the transactions are Crown Aim Ltd and 4C’s Diamonds in Hong Kong and Gitanjali Ventures DMCC and Asian Diamonds Jewellery FZE in the UAE.
Choksi had deputed his paid employees as dummy directors of most of these overseas companies, the statement said.
Gitanjali Ventures DMCC UAE, a 100 per cent subsidiary company of Gitanjali Gems Ltd and Asian Diamonds Jewellery FZE, is engaged in trading of diamond, colour stone, studded jewellery with Gitanjali group companies in India.
“As per the instructions received from Gitanjali head office in Mumbai, the payments received from the Hong Kong-based companies were further remitted into the accounts of Gitanjali group companies in India.
“Similarly, the consignments received from Hong Kong-based companies also were further exported under ‘air to air’ export to India. Most of the payments received against these exports were used for repayment of bank loans of UAE based ICICI Bank, Standard Chartered Bank and EXIM Bank.
“The quantity of the consignments were split into more than one consignment before it was exported to next destination to avoid detection, and accordingly export documents were prepared for further destination,” the statement said.
In the name of export and import, Choksi through his various companies in India and abroad was involved in money laundering activities.