PNB fraud: Nirav Modi jewellery estimated at less than 30 per cent of book value

The investigative agencies probing Modi for the alleged Rs 6,498 crore fraudulent transactions at the state-owned Punjab National Bank (PNB) are now of the view that the firms owned by the jeweller may have inflated the value of jewellery in their account books.

Written by Khushboo Narayan | Mumbai | Updated: May 31, 2018 2:44:59 am
PNB fraud: Nirav Modi jewellery estimated at less than 30 per cent of book value ED officers at a Nirav Modi showroom. (Express File Photo: Tashi Tobgyal)

AN INDEPENDENT valuation of the jewellery and pearls seized by the Enforcement Directorate (ED) from the firms and residence of fugitive diamond jeweller Nirav Modi has pegged its value at over Rs 485 crore, which is just 27 per cent of the book value of about Rs 1,780 crore declared by Modi’s firms, sources have told The Indian Express.

The investigative agencies probing Modi for the alleged Rs 6,498 crore fraudulent transactions at the state-owned Punjab National Bank (PNB) are now of the view that the firms owned by the jeweller may have inflated the value of jewellery in their account books. According to sources, much of the over-valuation of jewellery and pearls has been detected in five units of Modi’s firms located in the Special Economic Zone (SEZ) of Surat.

For instance, the book value of pearls and gold held by the Surat SEZ units of Firestar International Pvt Ltd, Firestar Diamond Pvt Ltd, Diamonds R Us, Solar Exports and Stellar Diamond was shown as Rs 1,390 crore. However, the government approved valuer has now pegged the value at Rs 157 crore. The value of cut and polished diamonds held by the Maharashtra units of Firestar Diamond has also been slashed from Rs 153 crore to Rs 83 crore.

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 Modi Group firms and Gitanjali Gems, promoted by Modi’s uncle Mehul Choksi. Of this, jewellery of book value of about Rs 1,780 crore and Rs 3,860 crore were seized from the firms of Modi and Choksi, respectively. However, the independent valuation report of the agency is likely to bring down the total value of the seized jewellery, said sources.

READ | PNB fraud: ED to seek immediate confiscation of Nirav Modi’s assets under fugitive ordinance

With the completion of the independent valuation of the jewellery, the total assets attached by ED in the case of Modi alone stands at about Rs 1,175 crore, said sources. This includes attached immovable properties and funds in bank accounts adding up to Rs 690 crore.

This is not the first time that Modi’s firms have been accused of over-valuation of stocks at the SEZ units in Surat. In 2015, the Directorate of Revenue Intelligence (DRI) had raised a duty demand of Rs 24.52 crore against Modi, after it found that his factories in Surat had wrongly declared exports and diverted imported, duty-free, cut and polished diamonds and pearls to the domestic market.

Following specific intelligence, the DRI stopped the group’s “several export consignments of diamond-studded gold jewellery” to Hong Kong, UAE, US and Canada. The agency alleged that jewellery meant for Hong Kong and UAE were of “very low quality”. A government-approved valuer pegged the value of the consignment at one-tenth of the declared cost.

The DRI searched Modi’s factories at Surat SEZ and verified the stock of imported duty-free raw material, which revealed huge variation when compared to cut and polished diamonds and pearls. According to the DRI, it found cut and polished diamonds worth Rs 100 crore in stock at the factories as against declared stock of Rs 1,100 crore. The total value of pearls in stock was Rs 4 crore instead of the declared stock of over Rs 100 crore.

In March 2018, the DRI booked another case against Modi’s Surat factories for alleged duty evasion of Rs 52 crore using the same modus operandi.

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