At least seven employees, including the company secretary, of Mehul Choksi-promoted Gitanjali Group have told the Enforcement Directorate (ED) that a large number of firms of the group did not hold any board meetings and “fake” minutes of board meetings were regularly prepared and submitted to the Registrar of Companies (RoC) by the secretarial department of Gitanjali Gems Ltd.
The Companies Act 2013 mandates that Indian companies should hold a minimum of four meetings of its board of directors every year.
The ED in its prosecution complaint (chargesheet) against Choksi also said that in November 2017, two months before the Rs 13,600 crore scam involving Punjab National Bank broke, Choksi handed over a list of properties of Gitanjali Group including an under-construction luxury residential project — Tatva in suburban Mumbai — to the Vice-President (Account & Finance) of Gitanjali Gems and instructed him to sell the lien free properties on “urgent basis” within a month and rent out the mortgaged properties and take a loan.
The Indian Express had earlier reported that at least 75 people who are still awaiting the possession of their flats at Tatva have approached the Maharashtra Real Estate Regulatory Authority (RERA) seeking action against Choksi, who fled the country in the first week of January.
The ED prosecution complaint said that Choksi appointed a number of employees as “dummy” directors of his firms even as these companies had no employees, no board meetings and no business. “…they were dummy directors and they had not been given any power of authority with regard to any decision making pertaining to their respective companies. It is also seen that although no board meetings, pertaining to the said group companies, were ever held; however fake minutes of meetings were prepared and the said dummy directors were made to sign it under the directions of Mr. Mehul Choksi,” it said.
According to the complaint, these companies included Nashik Multi Services SEZ Ltd, Decent Investment & Finance Pvt Ltd, Decent Securities & Finance Pvt Ltd, N&J Finstocks Pvt Ltd, Eureka Finstock Pvt Ltd, Evergold Jewels Pvt Ltd, Mobile NXT Telservices Pvt Ltd, Mannat Jewellery Manufacturing Pvt Ltd, and Vidarbha Multi Products SEZ Ltd.
The complaint also said that seven “dummy companies” associated with Choksi in India were used to rotate Rs 5,500 crore of the funds raised through Letters of Undertaking (LoUs) and loans obtained by Gitanjali Group from public and private banks between January 2014 and December 2017. The seven firms include Jain Diamonds Pvt Ltd, Jhankar Vanijya Pvt Ltd, Mumbai Gems & Diamond Pvt Ltd, Iris Merchantile, Premier Intertrade, Shriji Multitrade Pvt Ltd and Niva Commercial Pvt Ltd.
The agency said this was done to “fabricate picture of credit summations or turnover in bank statements before settling the liabilities arising from fraudulent LoUs and FLCs (Foreign Letters of Credit)”.
Choksi and his nephew Nirav Modi are wanted by multiple investigating agencies after the state-owned PNB complained against their companies, saying it had been cheated of Rs 13,600 crore through fraudulent issue of LoUs and FLCs.