Owners and directors of at least five Hong Kong firms that allegedly received about Rs 8,270 crore from Letters of Undertaking (LoUs) issued by Punjab National Bank, on behalf of jeweller Nirav Modi, used to earn only between Rs 8,000 and Rs 30,000 every month, according to the Enforcement Directorate.
Referring to these findings in its prosecution complaint filed in the PNB scam case, the ED has said that Modi created over 15 “dummy companies” overseas to allegedly rotate the LoU funds “in the guise of export-import transactions”.
It claimed that the directors of five such firms — Brilliant Diamonds Ltd, Eternal Diamond Corp Ltd, Fancy Creation Co Ltd, Sino Traders Ltd and Auragem Company Ltd — were actually junior employees and ex-employees of Modi’s Firestar Group.
Identifying some of these persons, the ED stated in its complaint:
* Bhavik Shah, a former diamond assorter for Firestar International, was named the director of Hong Kong-based Brilliant Diamonds. Shah used to earn Rs 10,478 as salary every month as director of Brilliant Diamonds, which did business worth Rs 959 crore with Firestar International in 2015-16.
* Ashish Bagaria, a former data entry operator of Firestar India, was made the director of Eternal Diamond Corp at a monthly salary of Rs 8,133. Eternal Diamond executed transactions worth Rs 929 crore with Firestar International in 2015-16.
* Nilesh Khetani, the owner of Fancy Creation, earned Rs 15,657 every month, while the company engaged in business transactions worth Rs 596 crore with Firestar International. Khetani was a former data entry operator with Jewellery Solutions, a Nirav Modi firm.
* Kartik Doshi, director of Sino Traders, earned a salary of Rs 29,899 every month while the company executed transactions worth Rs 573 crore in 2015-16. Doshi is also a former employee of Modi’s flagship firm Firestar International. In his statement to the ED, Doshi claimed that he was unaware of Sino Traders’ business and “never operated any bank accounts”. He also claimed that he was sent to Hong Kong twice by Firestar International and made to sign documents pertaining to Sino Traders, according to the agency. In 2014, it said, Doshi resigned from the Hong Kong firm as “he got afraid”.
According to data accessed by The Indian Express, while Sino Traders received Rs 2,324 crore through PNB’s LoUs, Auragem Company got Rs 3,795 crore, Fancy Creation Rs 1,616 crore, Brilliant Diamonds Rs 425 crore and Eternal Diamond Rs 108 crore.
In its complaint, the ED claimed that Modi and some of his associates used to “communicate dubious transaction instructions” to these dummy firms through accounts that got automatically deleted after a certain period of time.
According to the agency, goods were moved between Firestar Group firms and these dummy companies in Hong Kong, Dubai and India. This, it said, led to the creation of huge outstandings in the books of the dummy companies against the Indian firms.
According to the ED, the fraudulent funds obtained from PNB were then “layered against the payments of the dummy exports/imports” and subsequently “were diverted from Hong Kong to various other related companies/entities located in other countries”.
For instance, the ED claimed, the five Hong Kong firms diverted about Rs 840 crore of LoU funds to two US-based firms of Nirav Modi; Rs 271 crore to Belgium-based companies; Rs 238 crore to Nirav Modi Pvt Ltd in Hong Kong; Rs 535 crore to firms in Dubai; and, Rs 163 crore to companies in India. READ | Who is Nirav Modi?
Among these, the two US firms, Firestar Diamond Inc and A Jaffe Inc, have filed for bankruptcy, it said.
The ED has also claimed to have found that the top eight overseas buyers and eight suppliers of the Nirav Modi Group are all ex-employees of the group and “still work on instructions of Nirav Modi”.
According to the ED complaint, fraudulent LoUs worth $ 3,741.93 million (approximately Rs 24,000 crore) were issued to Modi Group firms between 2011 and 2018. Of these, it alleged, the total current outstanding fraudulent LoUs is $ 1,015.34 million.