PNB loan fraud: Belgium confirms Mehul Choksi’s arrest, extradition request by India

“Finally, the Belgian Federal Public Service of Justice can confirm that the Indian authorities have introduced an extradition request for Mr Choksi,” the spokesperson said, adding that no further details can be released at this stage.

When contacted, a spokesperson of the Antwerp police confirmed that they had successfully executed the arrest warrant. The action “concerns an arrest ordered by the international service, Antwerp Public Prosecutor’s Office, following the service of an extradition procedure and the decision declaring a foreign arrest warrant enforceable,” the spokesperson said.

India and Belgium have a long-standing extradition treaty. “Following his detention on Saturday, a team of three to four senior officials of CBI have been asked to travel to Belgium to complete all the procedures and documentation work,” said sources.

Confirming Choksi’s arrest, his lawyer, Vijay Aggarwal, said they are in the process of filing an appeal. “Our appeal seeking his release on bail will mainly be on the ground of his medical condition, he is undergoing treatment for cancer. We will also be arguing that he is not a flight risk,” Aggarwal said.

He said the case can come up for hearing only after five days, which is when they will be filing the appeal for bail. “At the moment, he is in prison and there (Belgium), the procedure is not to apply for bail but file an appeal. During that appeal, request is made that he should not be kept in detention and he should be permitted to defend himself and oppose the extradition request while not being in custody,” Aggarwal told reporters.

He said their legal defence would be that this is a “political case and the human condition (in Indian prisons) was not good”.

Choksi, his nephew and fugitive diamond merchant Nirav Modi, and their family members were among those booked by the Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) in 2018 for perpetrating the alleged loan fraud at PNB’s Brady House branch in Mumbai.

Nirav Modi, declared a fugitive economic offender, has been lodged in a London jail since he was held by the authorities there in 2019 on the basis of a legal request made by the ED and the CBI. He is contesting extradition to India.

Both the CBI and ED have filed multiple chargesheets and prosecution complaints against Choksi and Nirav Modi.

According to the CBI chargesheet, Choksi, his firm Gitanjali Gems and others “committed the offence of cheating against PNB in connivance with certain bank officials by fraudulently getting LoUs (Letters of Undertaking) issued and got FLCs (Foreign Letter of Credit) enhanced without following prescribed procedure, causing a wrongful loss to the bank”.

According to the investigating agencies, officials at PNB’s Brady House branch in Mumbai issued 165 LoUs and 58 FLCs during March-April 2017, against which 311 bills were discounted. These LoUs and FLCs were allegedly issued to Choksi’s firms without any sanctioned limit or cash margin and without making entries in PNB’s central banking system to evade any scrutiny in case of a default.

LoUs are a guarantee given by a bank on behalf of its client to a foreign bank. If the client does not repay the foreign bank, the liability falls on the guarantor bank. Based on these LoUs by PNB, money was lent by overseas branches of some banks.

“Since the accused companies did not repay the amount availed against the said fraudulent LoUs and FLCs, PNB made the payment of Rs 6,344.97 crore, including the overdue interest, to the overseas banks, which had advanced buyer’s credit and discounted the bills against the fraudulent LoUs and FLCs issued by the PNB,” the CBI said in a supplementary chargesheet.

Earlier this year, the CBI sent a request to the Belgian authorities, through the Ministry of External Affairs, for Choksi’s extradition to India.

With Choksi remaining absconding, the Enforcement Directorate (ED) also filed a plea under the Fugitive Economic Offenders Act. If declared a fugitive economic offender, his properties can be confiscated even before the trial begins.

Choksi has filed various applications challenging the final proceedings to declare him a fugitive economic offender. The special court in Mumbai is yet to decide on these applications.

During an earlier hearing, Choksi’s lawyers had said that he was in Belgium to undergo treatment for cancer. It was submitted that Choksi, who fled to Antigua and Barbuda, travelled to Brussels to get “immediate and necessary medical treatment”. Choksi’s wife, Preeti, is known to be a Belgian citizen.

Earlier, the ED told a special court in Mumbai that Choksi had devised the plan to flee India long ago, and took citizenship of Antigua and Barbuda in November 2017, before the FIR was filed in the PNB fraud case.

In May 2021, Choksi was apprehended in Dominica for illegal entry. His family and lawyers alleged that he had been “kidnapped by Indian agents” by trapping him through a Hungarian woman. He was then allegedly ferried to Dominica in a yacht. India appealed to Dominica for extradition, but Choksi was sent back to Antigua and Barbuda.