The Largest Fraudulent Case of India: Deciphering the Nirav Modi Case



Nirav Modi is a global diamond jewellery house established in 2010 by founder, Nirav Modi. He has been popping up in the news lately, because of fraud allegations by Punjab National Bank (PNB) as a part of $1.8 billion or Rs 11,300 scam. This is the biggest fraudulent case of India. He is currently being investigated thoroughly by the Central Bureau of Investigation based on a complaint filed by the PNB. A case had been filed under the Prevention of Money Laundering Act (PMLA) after going through a CBI FIR filed.
Punjab National Bank, in its cautionary note to other public and private sector banks, informed the stock exchange that their own official personnel had helped Nirav Modi to get credit without proper guarantees and in defilement of rules. It was found through SWIFT trail that one junior level branch official fraudulently issued Letters of Undertaking (LoU) on behalf of some businesses belonging to Nirav Modi. Eight letters of understanding were issued to the jeweller without being recorded in the books. The money belonging to the taxpayers have been transferred abroad, the bank claimed. Nirav Modi had been deceiving the bank since a very long time but the fraud was detected when Nirav Modi’s companies sought a new loan. Apparently, Modi had been deceiving the Banks since 2011. The state-run bank has initiated inquiry into the supervisory lapses that allowed the crime.
Sources say that Union bank of India, Allahabad Bank and Axis Bank figure in the list of banks that offered the jewellery company buyers’ credit based on PNB’s Letters of Understanding along with some foreign bank. According to the reports, these three banks funded roughly Rs 7000 crore based on the LoUs of PNB. The Economic times also mentions that State Bank of India and Bank of India are also entwined in the fraud. As a result, Union bank of India fell 1.85% and Allahabad Bank fell by 5.6%.
A day after an enormous $1.8 billion fraud was discovered in a PNB branch in Mumbai, the Enforcement Directorate on Thursday propelled a country-wide raid on the offices, showrooms and workshops of the billionaire diamond merchant and jewellery designer Nirav Modi. On 15th of February, they searched 17 locations for the case and the Enforcement Directorate said that it had seized diamonds, jewellery and gold worth Rs 5,100 crore. PNB has promised to have the capacity and capability to come out of the situation and also, they promised to honour all the bonafide commitments.
The CBI and the ED moved separate applications to the external affairs service seeking for the disavowal of passports of Modi and his maternal uncle Mehul Choksi, the promoter of Gitanjali Jewellery chain, both denounced in the fraud case the authorities said.
Nirav Modi’s whereabouts remain a question, although he left the country on January 1, long before the CBI received a complaint from Punjab National Bank. He was recently spotted in a group photo in Davos with Prime Minister Narendra Modi. Several people alleged the Prime Minister of being aware of the scam, yet remaining quiet over it, but the government vehemently denied this allegation and regarded it as ‘shameful’. Union minister Ravi Shankar Prasad said that Nirav Modi’s passport shall be revoked. Congress leaders also accused the BJP government over this issue and alleged this to be their responsibility.
Discredited billionaire Nirav Modi’s assurance to bankers in a letter recently that he would repay all the cash he owes them. Bankers are not ready to believe the statement. They consider it to be a tactic of buying time.
In addition to the above case, a case against Nirav Modi has also been lodged by Bollywood actress Priyanka Chopra. She alleged that she and her team have not received payment for endorsement of the brand. Priyanka Chopra and Sidharth Malhotra were recently appointed as brand ambassadors for Nirav Modi Jewels. He claimed to have cut off ties with the businessman. She decided to sue Modi. Given the outrage, it isn’t clear how many celebrities would continue to associate with and promote the brand, or even shoppers who were attracted to the products would venture into those outlets again. That basically could pull down the business, sales, profits and at last the value of the firm. It might be valued far not as much as the Rs. 6,000 crore that he has shown.
Such cases affect not only the economy but also create an atmosphere of incredulity in the country. Also, it has several political impacts as well. We can only wait to see what this happens next!

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