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Posted at: Feb 15, 2018, 1:59 AM; last updated: Feb 15, 2018, 10:58 AM (IST)

Rs 11,400-crore fraud at PNB

ED books diamond merchant Nirav Modi; several banks face heat
Rs 11,400-crore fraud at PNB

New Delhi, February 14

The Enforcement Directorate (ED) today registered a case against diamantaire Nirav Modi and others under the Prevention of Money Laundering Act (PMLA) after going through a CBI FIR filed early this month. It is understood that the agency also went through the Punjab National Bank (PNB) complaint against Nirav Modi and others.

The CBI has now received two fresh complaints from the PNB against Nirav Modi and a jewellery company alleging fraudulent transactions worth about Rs 11,400 crore, one-third of its market capitalisation, at one of its Mumbai branches. 

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The PNB has suspended 10 officials. The huge fraud involves other banks too.

The PNB stock plunged 9.81 per cent after it informed stock exchanges about the fraudulent transactions (worth $1.77 billion) at one of its branches for the benefit of select account holders with their apparent connivance.

“Based on these transactions, other banks appear to have advanced money to these customers abroad. In the bank, these transactions are contingent in nature and liability arising out of these on the bank shall be decided based on the law and genuineness of underlying transactions.”

In an earlier filing on February 5, the PNB had said it had come across a suspected fraud involving a branch wherein certain irregularities had been observed. 

Several banks are likely to face the heat for their links with Nirav Modi. 

Sources said the billionaire, his wife Ami, brother Nishal and uncle Mehul Choksi had undertaken several circular transactions on the basis of Letters of Undertaking (LoU) allegedly obtained fraudulently from one of the PNB branches located in downtown Mumbai. 

The names of private sector Axis Bank and public sector Allahabad Bank figure in the matter.

According to the FIR, Modi and his associates allegedly floated several firms ostensibly in the diamond business — Diamond R US, Solar Exports and Stellar Diamonds. 

Bogus invoices and orders from buyers generated by these companies were used to borrow funds from the PNB.

Modi’s uncle Choksi, whose Gitanjali Gems is listed on the exchanges, was earlier barred from the stock markets by SEBI for manipulating the company’s stock price. 

Modi, who owns the “Nirav Modi” brand of diamond jewellery, had recently hired Bollywood actress Priyanka Chopra as brand ambassador.  — TNS & PTI

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