Gitanjali Gems owner Mehul Choksi allegedly diverted about Rs 4,000 crore of the Rs 6,000 crore from outstanding letters of undertaking (LoUs) and foreign letters of credit (FLCs) issued by Punjab National Bank (PNB) to his flagship firm’s subsidiaries, other companies linked to him abroad and to buy a villa in the UAE, sources told The Indian Express.
The companies that benefitted, sources said, included a US firm owned by Nehal Modi, Choksi’s nephew and the brother of PNB scam co-accused Nirav Modi.
According to sources, the Enforcement Directorate found that Choksi used four Hong Kong-based firms to allegedly divert about Rs 3,500 crore of the outstanding LoU and FLC funds to related companies in USA, UK, UAE, Thailand, China, Japan, Italy and Belgium.
Sources said the Hong Kong firms — 4 C’s Diamond Distributor, Crown Aim Ltd and Shanyao Gong Si Ltd — are indirectly controlled by Choksi through dummy directors. A Thailand-based firm Abbey Crest has also allegedly received about Rs 90 crore of the LoU funds, sources said.
Apart from this, sources said, Choksi allegedly diverted over Rs 250 crore of the LoU and FLC funds through firms in UAE. Of this, over Rs 120 crore was transferred to the US firm headed by Nehal Modi, who has been named as an accused in the prosecution complaint filed by ED against Nirav Modi last month.
Choksi also spent over Rs 20 crore on buying a villa in UAE, Rs 25 crore as loan advances to overseas subsidiaries of Gitanjali Group and about Rs 50 crore to a Mauritius firm, sources said.
Choksi and Nirav Modi are wanted by multiple investigating agencies after state-owned PNB complained against their companies, saying it had been cheated of Rs 13,600 crore through fraudulent issue of LoUs and FLCs. Both left India in January, a few weeks before the scam came to light. Choksi is known to be residing in the US.
Sources said Choksi’s firms allegedly availed of LoUs and FLCs worth over Rs 23,000 crore from PNB. Of this, around Rs 17,000 crore was brought back to the country and was used for repayment of older LoUs and FLCs of PNB.
The probe agency has found that at least Rs 14,000 crore was brought back to India allegedly in the guise of import transactions of Gitanjali Group firms and rotated among a few dummy companies in the country, such as Premier Intertrade and Iris Mercantile, before the money was repaid to PNB. The remaining Rs 3,000 crore was paid directly to PNB.
The Indian Express had first reported on April 5 that the directors of Premier Intertrade and Iris Mercantile were “people of meagre means” who earned salaries of Rs 12,000 per month and that their firms were indirectly controlled by Choksi, who allegedly used them to divert loans. According to the financial records of Gitanjali Gems, the flagship company of Choksi, Premier Intertrade and Iris Mercantile are the top creditors of the firm.