The Enforcement Directorate (ED) on May 10 seized 34,000 pieces of jewellery valued at Rs 85 crore from the Dubai subsidiary of Gitanjali Group controlled by Mehul Choksi under the Prevention of Money Laundering Act (PMLA).
In a statement by the ED, it said that Choksi who is currently being probed in connection with the Rs 13,400 crore fraudulent transactions at state-owned Punjab National Bank (PNB) told that Gitanjali Group has “many overseas subsidiary/dummy/shell companies” which were used by him for alleged circular trading.
“He (Choksi) had devised a modus operandi under which the Indian entities of Choksi were importing the unfinished goods/raw material viz. diamonds, color stones, pearl etc. from his overseas entities situated mainly in Hong Kong and UAE. The same goods were shown to be processed and made into jewelery and again exported by the Indian entities of Choksi to his overseas entities. After dismounting diamonds, color stones, pearl etc. from the jewellery, gold/silver was sent for melting and converted into bullion and sent back to India directly or through Dubai. While rotating such transactions, sometimes there were one step transaction and sometimes two or three step transactions depending upon the instructions received,” said the ED.
The overseas companies which were used for routing the transactions include Crown Aim Ltd. and 4C’s Diamonds in Hong Kong; and Gitanjali Ventures DMCC , Asian Diamonds and Jewelery FZE in UAE. Most of these firms were controlled by Choksi through dummy directors , the ED has alleged.
While the declared value of the seized jewelery is Rs 92 crore, the fair market value of the seizure is Rs 85 crore, the ED said. According to the agency, the data obtained from PNB has found that unauthorized Letters of Underaking (LOUs) aggregating to Rs. 3,032.17 crore and unauthorized FLCs aggregating to Rs. 3,106.56 crores were issued to the Gitanjali Group.
The ED has alleged that the funds raised for payment of import bills have not been utilized for such purposes in many cases.