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Thursday, July 19, 2018

PNB fraud case: Jewellery seized from Mehul Choksi firm is just 3 per cent of book value

According to sources, while the stock value of gold and diamond jewellery at the retail stores of Gitanjali Group was not inflated, the probe agency has found maximum inflation of the stock kept in factories and safe rooms of the group in Mumbai.

Written by Khushboo Narayan | Mumbai | Updated: July 3, 2018 8:00:32 am
Mehul Choksi diverted Rs 4,000 crore to Gitanjali subsidiaries: Probe Mehul Choksi and his nephew, Nirav Modi, are wanted by multiple investigating agencies.

An independent valuation of the gems and jewellery seized from Mehul Choksi-owned Hyderabad Gems SEZ Ltd has pegged its value at about Rs 103 crore, which is less than 3 per cent of the value of Rs 3,840 crore declared in the firm’s books, sources told The Indian Express.

The government-approved valuer has also valued the gems and jewellery seized by the Enforcement Directorate (ED) from 130 shops, factories and warehouses of Choksi-promoted Gitanjali Group at Rs 597 crore, down 53 per cent from its book value of about Rs 1,280 crore declared in the books of Gitanjali Group firms.

According to sources, while the stock value of gold and diamond jewellery at the retail stores of Gitanjali Group was not inflated, the probe agency has found maximum inflation of the stock kept in factories and safe rooms of the group in Mumbai.

READ | Low-quality gems at high value: Mehul Choksi got Dubai warning

For instance, the book value of polished diamonds and gems of Gitanjali Gems at Bharat Diamond Bourse in Mumbai was shown as over Rs 450 crore while the government valuer has pegged its value at Rs 120 crore. Sources said Choksi and his firms submitted overvalued stock statements to the banks for inflating the drawing power against existing credit limits.

READ | Salary Rs 12,000 per month, ‘cleared’ Rs 2,500-crore loan to Mehul Choksi’s Gitanjali Gems

Choksi and his nephew, Nirav Modi, are wanted by multiple investigating agencies after state-owned Punjab National Bank (PNB) complained against their companies, saying it had been cheated of Rs 13,600 crore through fraudulent issue of letters of undertaking (LoUs) and foreign letters of credit (FLCs). Both left India in January, a few weeks before the scam came to light.

READ | PNB fraud case: Can’t travel to India, threat to life due to mob lynching trend, says Mehul Choksi

In February, the ED said in a statement that it had seized gold, diamonds and jewellery with a book value of Rs 5,649 crore from Nirav Modi Group firms and Gitanjali Group. Of this, jewellery of book value of about Rs 1,780 crore was seized from Modi’s firms, and the remaining from Choksi’s firms. However, in both the cases, the independent valuation has brought down the total value of the seized jewellery.

A cheating case has been filed against Mehul Choksi A sealed showroom of Mehul Choksi’s Nakshatra in Kolkata. (Photo: Partha Paul/File)

Apart from the seizure of gems and jewellery, the ED has so far provisionally attached movable and immovable properties of Choksi and his firms that have a market value of over Rs 1,700 crore.

Also read | Glossed over, auditors flagged loan default, forex violations

The agency, sources said, has also found that at least 32 firms of Gitanjali Group in India were not active, had no employees, did not conduct any board meetings and had no business transactions, but the companies have filed minutes of board meetings with the ROC (Registrar of Companies).

Also read | Mehul Choksi diverted Rs 4,000 crore to Gitanjali subsidiaries: Probe

Sources said the ED is looking into the role of at least a dozen Dubai-based market operators that were allegedly used to rotate LoU funds received by firms related to Choksi in Dubai. These operators were used to camouflage the source of funds in return for a small commission. Some of the market operators include firms like Jasmine LLC, Indigo Trading FZC and Omri Jewellery among others.

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