CBI files FIR against Gitanjali Group,Probe widens as I-T attaches Nirav Modi properties, banks accounts

The government suspended passports of Nirav Modi and Mehul Choksi. In the CBI raids on the Gitanjali Group, officials said, gold, diamond and jewellery worth Rs 549 crore were seized.

The Congress and the Bharatiya Janata Party traded charges over the fraud at the state-owned Punjab National Bank involving jeweller Nirav Modi and his uncle Mehul Choksi on a day when the Central Bureau of Investigation registered fresh complaints against the latter and some of his companies, the Ministry of External Affairs suspended their passports for four weeks, the Enforcement Directorate seized Rs 549 crore worth of precious stones and gold from premises of the two, and the income tax department attached 29 properties and 105 accounts of Modi, his wife, and their companies.

The Congress claimed the actual size of the fraud at the bank was Rs 21,306 crore and stepped up heat on the Prime Minister and his government for the escape of jewellery designer Nirav Modi who left India on 1 January.

Human Resources Development Minister Prakash Javadekar retorted that the fraud was perpetrated in 2011, when the Congress-led UPA was in power.

Matters took an interesting turn with Dinesh Dubey, a former director of Punjab National Bank claiming to news agency ANI that in 2013 he had sent a dissent note to the UPA government and the Reserve Bank of India against a decision to provide a loan to Choksi’s Gitanjali Gems. He added that he resigned after he was pressured to sign off on the loan. Former banking secretary Rajiv Takru said he had no knowledge of this and had met Dubey only once, when the latter visited him to hand over his resignation.

The CBI’s complaints against Choksi and his company Gitanjali Gems were in relation to a Rs 4887 crore fraud which is part of the larger Rs 11400 crore fraud perpetrated on PNB. A Gitanjali Gems spokesperson declined comment.

A CBI officer who asked not to be named said the fresh complaint concerned “143 letters of undertaking (LoUs) and 224 foreign letters of credit (LoCs)”. He added that CBI officers found a server on one of Gitanjali’s premises that could have data pertinent to the fraud.

According to CBI, Choksi and his companies used these LoUs, which were unauthorized by the bank, and issued by corrupt officials, to raise buyer’s credit overseas – the same charges leveled against Modi’s companies. This money was supposed to be used to buy pearls and diamonds, but wasn’t. The banks that loaned money to Choksi and Modi – on the basis of PNB’s guarantees – now want the lender to pay up.

Separately PNB moved to declare Gitanjali Gems a fraud company, which means other banks with exposure to the company will now have to do the same.

On Friday, CBI started questioning four PNB officials named in its earlier complaint, Sanjay Kumar Prasad, Bechu Tiwari, MK Sharma, and Manoj Kharat. PNB also suspended eight more officers including one at the general manager level, the Press Trust of India reported. That takes the total number of officers suspended by the bank since Wednesday when it first declared the Rs 11,400 crore fraud, to 18.

The Reserve Bank of India said it has undertaken an assessment of PNB’s control systems but denied news reports that it had directed the lender to meet its commitments to other banks.

On Thursday, the Enforcement Directorate recovered around Rs 5100 crore of gold, diamonds, and precious stones from 17 premises of Modi and Gitanjali Gems. On Friday, it asked Modi and Choksi to appear in its Mumbai office next week for questioning. Like Modi, Choksi too left India in early January, as did their families.