Nirav Modi Diverted Rs 4,299 Crore To Himself, Family And Firms Through Shell Companies

Using shell companies based in the UAE and Hong Kong fugitive diamantaire Nirav Modi diverted about Rs 4,299 crore of the Rs 6,939.84 crore outstanding fraudulent Letters of Undertaking (LoU) issued by Punjab National Bank (PNB) to himself, his firms and his relatives, the Enforcement Directorate has told the court.

According to the ED chargesheet filed on Thursday, a sum of USD 50 million, was "diverted" to Modi's father Deepak Modi who is reported to be based in Antwerp in Belgium.

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He also diverted Rs 1,811 crore to his Group firms, his sister Purvi Modi and her husband Maiank Mehta through nine UAE-based dummy firms ¡ª Diagems FZC, Pacific Gems, Unity Trading Company, Tri Color Gems, Universal Fine Jewellery, Himalayan Trader FZE, Hamilton Precious Traders, Unique Diamond and Jewellery FZC, and Vista Jewellery FZC.

The agency also found that at least Rs 137 crore of the LoU funds were brought back to Nirav Modi¡¯s personal bank accounts in India.

A total of 24 accused have been listed in the charge sheet, filed under section 45 of the PMLA, including Nirav Modi, his father, brother Neeshal Modi, sister Purvi Modi, brother-in-law Mayank Mehta and the designer jewellers' firms--Ms Solar Exports, Stellar Diamonds and Diamonds R Us.

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"These firms and Modi's Firestar group of companies had fraudulently obtained Rs 6,498 crore through Letters of Undertaking (LoUs) issued by the Punjab National Bank, Brady House branch in Mumbai," the central probe agency said in a statement.

The funds so obtained, it said, by the three were "partly utilised for payment to various overseas companies and also for offsetting earlier LOUs".

"It was revealed during investigation that the payments were made to 17 overseas entities in Hong Kong, Dubai and the USA since 2011 in the guise of export and import," the agency said in its charge sheet.

It added that the probe revealed that all these overseas firms are "dummy companies" of Nirav Modi and the directors and shareholders of these companies were "dummy directors" and were employees or ex-employees of Firestar group of companies who were working on directions of Nirav Modi and his other trusted officials-- Shyamsunder Wadhwa (Firestar vice president who was arrested by the ED in the case), Aditya Nanavati, Mihir Bhansali (US-based partner of Nirav Modi) and Saju Poulose.

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It said, the modus operandi of money laundering was to show manufacturing activities in these dummy overseas companies by over-valuing invoices and inflating balance sheets.

"The export and import was also not genuine and was just rotational transactions. The jewellery exported from India was dismantled and diamonds and pearls were taken out and the gold and silver was sent for melting," it said.

The melted metals, the ED said in the chargesheet, were re-exported to Dubai and India and diamonds and pearls were also separately re-exported to India.

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The whole process, it said, was carried out without any substantial value addition and was only carried out for inflating the turnover of Indian companies in order to acquire maximum credit facilities from the banks.

"Till date, diversion of the proceeds of crime to the extent of USD 629.21 million has been traced to several group companies, relatives, other dummy companies under Nirav Modi's control," the ED said.

It added that on the basis of this information, the ED has sent Letters Rogatories (LRs) to 15 countries till now for seeking evidences.