The Enforcement Directorate (ED) will move a special court this week for “immediate confiscation” of attached assets valued at over Rs 3,500 crore of diamond jewellers Nirav Modi and his uncle Mehul Choksi under the recently promulgated Fugitive Economic Offenders Ordinance.
This is the second case under the new ordinance where the agency will approach the court to seek an official declaration to categorise both Modi and Choksi “fugitives”, based on its prosecution complaints — chargesheets — filed under the Prevention of Money Laundering Act.
Modi and Choksi are wanted by multiple investigating agencies after State-owned Punjab National Bank complained against their companies, saying it had been cheated of Rs 13,600 crore through fraudulent letters of undertaking and foreign letters of credit. Both left India in January, a few weeks before the scam came to light.
If the court declares Modi and Choksi fugitives under the new ordinance, their assets in India and abroad will be liable for confiscation and can be sold to meet the creditors’ claims, even before the trial begins.
The Fugitive Economic Offenders Ordinance, which was cleared by the Cabinet in April, empowers authorities to attach and confiscate properties and assets of economic offenders like loan defaulters who flee the country. According to the ordinance, a Fugitive Economic Offender is a person who has an arrest warrant issued in respect of a scheduled offence and who leaves or has left India so as to avoid criminal prosecution, or refuses to return to India to face criminal prosecution.
Once the ED moves the court, Modi and Choksi will be given six weeks to present themselves at “a specified place at a specified time”. If they fail to do so, they will be declared “fugitive economic offenders”.
The probe agency has so far attached assets worth Rs 1,175 crore of Modi and Rs 2,400 crore of Choksi in India. This includes movable and immovable assets, diamonds, gold and jewellery.
According to the probe agency, the firms of Modi and Choksi have inflated the value of the diamonds, pearls and jewellery lying in their units in special economic zones in Surat and Hyderabad as well as vaults. An independent valuation of the gems and jewellery of Modi and Choksi attached by the ED found the value of the stock inflated three times in case of Modi’s firms and about 10 times in the case of Choksi’s firms.
A PMLA court in Mumbai has already issued non-bailable warrants against Modi and Choksi on the request of the ED. While Choksi is learnt to be in the US, Modi is likely to be in either Belgium or the United Kingdom, said sources. The ED is likely to file extradition requests to both Belgium and the US this week, said sources. The agency has already filed an extradition request to the UK in connection with the case.