The Enforcement Directorate (ED) on Thursday, 28 June, filed a chargesheet against Gitanjali Gems promoter Mehul Choksi and 13 others in the multi-crore Punjab National Bank (PNB) fraud case.
The prosecution complaint filed in the special Prevention of Money Laundering (PMLA) court charges eight individuals and five companies under Section 4 of PMLA, 2002 Act for the offence of money laundering.
The case was reportedly initiated by ED in February on the basis of the FIR filed by the Central Bureau of Investigation (CBI).
ED Claim 1 – Jewellery Exported to Dummy Firms Under Choksi’s Control
The financial probe agency claimed that jewellery studded with diamonds or precious stones (in semi-finished form and of very poor quality) was exported to overseas dummy firms or firms directly controlled by Choksi in Hong Kong.
The ED named five overseas suppliers of Choksi — 4C's Diamonds Distributors in Hong Kong, Shanyang Gong SI Limited in Hong Kong, Asian Diamonds and Jewellery FZE and Gitanjali Ventures DMCC in the United Arab Emirates and Abbeycrest Limited in Thailand.
"These were then dismantled by these Hong Kong-based dummy entities and diamonds or precious stones removed. The gold or silver thus obtained was melted at local melting units and converted into bullion," the chargesheet said.
According to the ED, Choksi used dummy companies such as Taipingyang Trading Ltd and Trans Exim Limited in Hong Kong, and Al Burj Diamond and Jewellery FZE, Asian Diamonds Jewelery FZE, Eternity Jewels FZE, and Al Arba Jewels FZE etc.
ED Claim 2 – “Fabricated Debtors” Manipulated Credit Limits
The Enforcement Directorate also alleged that "fabricated debtors" were used to manipulate continuation or enhancement of credit limits.
“Goods exported to other countries were of abysmally low quality but their value was highly inflated. The valuation of exported/imported goods was decided by Choksi,” the chargesheet read.
"The bullion and removed diamonds and other precious stones were then exported as raw material to India," the agency alleged.
ED Claim 3 – ‘Uncleared’ Consignments Exported ‘as it is’ to the Next Destination
The agency also said that such consignments exported from India or Hong Kong were not getting cleared through the customs at the UAE airport and hence the same were exported 'as it is' to the next destination, that is, Hong Kong or India, as the case may be.
"This was done only to insert one more layer in the movement of funds," it said.
ED Claim 4 – Incorrect Records of LoUs
The ED chargesheet also alleged that "from 1 April, 2014, to 31 December, 2017, one Hong Kong-based beneficiary of Letters of Undertakings/Foreign Letters of Credit, namely 4C's Diamonds Distributors, remitted Rs 12,184.10 crore from Hong Kong but in books only Rs 150.48 crore was shown and the remaining money was adjusted against goods exported to Trans Exim Ltd in Hong Kong".
The agency said that its investigation revealed that of the Rs 23,382 crore remitted to Hong Kong from India between 1 January, 2015, and 31 December, 2017, Rs 3,004 crore was directly paid to foreign banks for repayment of earlier outstandings.
"While Rs 14,857 crore was remitted back via the Gitanjali Group companies in India to PNB for repayment of earlier dues, Rs 3,257 crore was diverted to the group companies overseas and Rs 105.72 crore remitted to India to other unrelated firms," it said.
The ED said that it is investigating whether Rs 599 crore were diverted to other overseas companies with connections with the Gitanjali Group or Choksi.
“Unable to Disclose Location Due to Threat to Life”: Choksi
On Wednesday, 27 June, the Gitanjali Gems promoter moved a special court in Mumbai seeking cancellation of a non-bailable warrant (NBW) issued against him.
Choksi's lawyer Sanjay Abbot moved the application before special CBI court judge J C Jagdale. In the application, he claimed that he cannot travel because of his medical condition.
The diamond merchant also claimed he was unable to disclose his current location as he was facing a threat to his life from various persons, PTI reported.
Choksi said that he never sought to avoid the investigation or the probe agencies and had duly responded to all the communication that he received from the investigating agencies, PTI cited him as saying.
Reportedly, he also contended that his case was completely different from that of his relative and fugitive jeweller Nirav Modi.
Choksi’s counsel Sanjay Abbot, in his response to the non-bailable warrant (NBW) issued against the fugitive businessman, said that there are over 10 grounds, mainly medical, on which they have approached the court.
"CBI said he isn't replying but my client has replied on each and every notice," ANI quoted Abbot as saying.
Nirav Modi and his uncle Mehul Choksi are among the main accused in the scam pegged at about Rs 13,400 crore.
The issuance of the alleged fraudulent letters of understanding (LoUs) is said to be the crux of the mega financial fraud.
The CBI filed three FIRs between January and March to probe the PNB fraud. Most of the accused are common to these cases. A special CBI court on 8 April had issued a non-bailable warrant against Nirav Modi and his uncle.
In its first chargesheet, the CBI alleged that diamond jeweller Nirav Modi, through his companies, siphoned funds totalling Rs 6,498.20 crore through fraudulent LoUs issued by the PNB's Brady House branch in Mumbai.
Mehul Choksi, Modi's uncle, allegedly swindled Rs 7,080.86 crore.
Both Modi and Choksi managed to flee the country in the first week of January days before the PNB was able to detect the fraud
(With inputs from PTI, IANS and ANI)
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