Mehul Choksi, the Managing Director of ‘Gitanjali Gems’ and also the maternal uncle of Nirav Modi, has come under the radar of various investigating agencies, following the Enforcement Directorate (ED) filing a case against the latter for conducting fraudulent transactions from the Punjab National Bank.
The ED’s move comes in response to two FIRs filed by the Punjab National Bank against Modi and his associates, for cheating it off a little over Rs 11,000 crore.
Choksi was one of the four named in the FIR that the bank submitted to the Central Bureau of Investigation, reports PTI.
However, the report adds that upon hearing this his company, ‘Gitanjali Gems’, said that their Managing Director had been ‘falsely implicated’ and that they would take legal steps to ensure that his name is removed from the list of the accused.
But who is Mehul Choksi? And why has he been named in the FIR in connection with the fraud?
The Man Behind Gitanjali Gems
According to The Economic Times, Choksi had taken over Gitanjali Gems from his father, Chinubhai Choksi in 1985, after joining the industry ten years before that. At the time, the company’s turnover was a rough Rs 50 crore, something that Choksi was reportedly keen to build on.
In fact, he told The Economic Times that before he took over the reins of the company, he used to attend college during the day and learn the tricks of the trade from his father in the evening.
The 53-year old, the report adds, also said that his goal, even when he was a teenager, was to “become the world's largest luxury player in branded jewellery.”
The Evolution of his Business
While Gitanjali Gems started out with trading in rough and polished diamonds exclusively, Choksi soon realised that even though it had made the company one of the largest exporters of raw diamonds across the world, this wouldn’t be getting him the profits that he desired.
According to ET, Choksi was successful in entering the international market and expanding his business. Soon enough, he turned towards building a product-portfolio, as a result of which brands such as Gili, Nakshatra, Asmi, D'damas, Maya, Diya and Sangini came under his purview.
The report adds that in the multiple retail format, they can now be sold through 4,000 points of sale.
In 2006, the company acquired Samuel Jewelers Inc and the 111 high-end stores that came under it. As a result of this, they managed to get direct access to the US retail market, the report adds.
Choksi’s Association with Modi
Choksi is reportedly Modi’s maternal uncle and also a partner to his three companies, that are being scanned by the investigating agencies.
According to PTI, the The Securities and Exchange Board of India (SEBI) and stock exchanges have been analysing the stock market trade details of his company, ‘Gitanjali Gems’, for various cases that include a brokerage default incident.
The report adds that SEBI is also proving the company for disclosure lapses, including the delay of a company board meeting, for which sufficient reasons were not provided.
‘Gitanjali Gems’ has not been doing very well recently. The report mentions that the company’s shares have dropped a good 42.2 percent in the past month, and continued to tank with a drop of 20 percent on Thursday.
This also marks the second consecutive session of decline for the company.
According to the report, Choksi, who is being investigated by the various agencies, has not been available for any comment and has also switched off his phone.
An Economic Times report said that although Nirav Modi’s father was also a diamond trader, who had migrated to Antwerp, Modi wanted to learn the trade from his uncle Choksi, and had returned to Mumbai for the same.
Why Was Choksi Named in the FIR?
According to PTI, Choksi is an alleged partner in the three firms of Modi that have been targeted by the CBI. These include ‘Diamonds R Us’, ‘Stellar Diamonds’ and ‘Solar Exports’.
Gitanjali Gems, however, said that Choksi had retired as a partner from 'Diamond R US' in 1999.
Since his retirement as partner, he had no association or dealings whatsoever with the firm.The company said in a statement, as reported by PTI
According to the report, the company also said that Choksi did not have anything to do with the other two firms in any capacity, and neither was he involved in any of the dealings.
(With inputs from PTI and The Economic Times)