PNB fraud: Court issues non-bailable warrants against Nirav Modi, Mehul Choksi

A special court today issued non-bailable warrants (NBWs) against diamond traders Nirav Modi and Mehul Choksi in the alleged Rs 12,700-crore Punjab National Bank scam. The court, set up under the Prevention of Money Laundering Act (PMLA), issued the NBWs on applications filed by the Enforcement Directorate (ED), one of the agencies probing the bank fraud cases registered last month. The court also allowed the ED's application seeking Letters of Rogatory (LR) to seven countries - Malaysia, Armenia, France, China, Japan, Russia and Belgium - in connection with the case.

The ED had earlier issued summonses to Modi and Choksi, both key accused in the scam cases, asking them to appear before the central agency. However, the two diamond traders, who are said to have left the country before criminal cases were registered, had failed to appear before the ED, prompting the agency to move the PMLA court for issuance of NBWs against them.

On February 27, the ED had moved the court seeking an NBW against Modi. The agency had told the court that it had issued three summonses to Modi to appear before it.

The agency said it received replies from Nirav Modi for two summonses. In response to the second summons, Nirav Modi said he cannot appear before the agency owing to his business commitments.
In reply to the third summons, the businessman raised the issue of his security, the ED counsel said.

"We issued three summonses to Choksi. He neither responded to those summonses nor appeared before the agency," special ED prosecutor Hiten Venegaonkar had told the special court presided over by Judge M S Azmi here on March 1.

Meanwhile, another court here today allowed the CBI to arrest Gokulnath Shetty, then deputy manager (now retired) of PNB, in connection with issuance of fraudulent Letters of Undertaking (LOUs) to Choksi-owned firms. Shetty has already been arrested in the case related to Nirav Modi's firms.

Earlier in the day, special CBI judge S R Tamboli remanded Shetty, Manoj Kharat, a single window operator of PNB; Hemant Bhatt, authorised signatory of Nirav Modi; Bechhu Tiwari, then chief manager in the Forex department of PNB; Yashwant Joshi, scale II manager in PNB's Forex department, and Praful Sawant, scale-I officer handling the bank's exports section, in judicial custody till March 17 in the Nirav Modi case.

"It was informed by PNB...That there are more than 150 LOUs amounting to Rs 6,498 crore which are falling due with effect from January to April, and all these were issued in 2017 by Shetty. The amount is likely to go up," CBI lawyer Limosin A told the court.

"The modus operandi adopted by the accused persons was that for settling the earlier LOUs/Buyer's credit, fresh LOUs were opened and the funds received from foreign banks against the LOUs were utilised for settling the outstanding LOUs/Buyers Credit," the agency's plea for judicial remand read.

A file containing copies of SWIFT messages from February 2017 to April 2017 was recovered from PNB's Brady House Branch following disclosure made by Shetty, it said. Bhatt told the investigators that all the LOUs were issued as per Nirav Modi's instructions, the CBI said.

Bhatt was also the authorised signatory for the accounts of Modi firms, and also a director in more than 20 companies of the Modi group, which "indicates that he is in collusion with Modi to induce PNB to issue fraudulent LOUs", the CBI said.

Fraudulent LOUs were being issued since 2010, but the documents related to them were not yet recovered, it said. "The scam by the Modi group was going on for the last more than eight years unchecked which is unusual," the agency said.

Joshi, the arrested PNB official, admitted that Modi had gifted him two gold coins of 60 grams each which were recovered, the CBI said.

On January 31, the CBI registered an FIR against Nirav Modi, his companies, and diamond jeweller Mehul Choksi in connection with the PNB fraud.

The CBI has also arrested Vipul Ambani, president (finance) of Nirav Modi's Firestar 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, then head of the Brady House branch of PNB.

Among those arrested in connection with Choksi's firms are Nakshatra group and Gitanjali group CFO Kapil Khandelwal and Gitanjali group manager Niten Shahi.