Mumbai/New Delhi: Diamond trader Nirav Modi, a key accused in the alleged PNB fraud which is now pegged at close to $2 billion, on Tuesday faced more heat with the Enforcement Directorate (ED) moving a court for a non-bailable warrant and another court issuing summons to him in a tax evasion case.
As Nirav Modi’s international jewellery business Firestar Diamond filed a bankruptcy plea in the US, officials said the Central Bureau of Investigation (CBI) questioned the chief executive officer (CEO) and the managing director (MD) of Allahabad Bank, Usha Ananthasubramanian, in the PNB fraud case that allegedly involved him and his uncle Mehul Choksi.
Ananthasubramanian was the MD and the CEO of PNB since 14 August 2015 before being appointed in Allahabad Bank on 6 May 2017. In Mumbai, special PMLA court judge M.S. Azmi heard the arguments of Enforcement Directorate’s (ED) special counsel Hiten Venegoankar on the agency’s plea seeking issuance of the NBW against Nirav Modi who is believed to be in the US.
Venegoankar told the court the ED registered a case against Nirav Modi on 15 February and from that time issued three summonses to him to appear before the agency. He said the summonses were issued on 15 February, 17 February and 22 February, asking him to appear before the ED on 16 February, 22 February and 26 February, respectively.
The ED lawyer said Nirav Modi did not appear before the agency for questioning and hence it has sought issuance of an NBW was against him. A local court in Mumbai issued summons against Nirav Modi in connection with an income tax evasion probe against him and his companies, officials said.
They said the court of additional chief metropolitan magistrate issued the summons and asked Nirav Modi to appear before it on 12 March. The court issued the notice after the income tax department had last week filed a charge sheet against him for alleged evasion of taxes and the court took cognisance of it on Tuesday.
The department’s counsel on Tuesday sought issuance of a NBW against Nirav Modi as he has not appeared before the taxman after summons were issued to him. The charge sheet was filed under sections 276 C (1) [wilful attempt to evade tax], 277 A [false statement in verification], 278 B [offences by companies] and 278 E [presumption as to culpable mental state] of the Income Tax Act, 1961.
On questioning of Ananthasubramanian, a CBI official said in Delhi that agency wants to get clarifications from her as to how huge transactions were bypassing surveillance system in the PNB and whether audit reports were red flagging these transactions. The 60-year-old banker, who was recently elected as the chief of Indian Banks’ Association, had held senior positions in the PNB where Modi and Choksi were allegedly getting fraudulent guarantees since 2011.
The PNB has said that the alleged fraud perpetrated by Nirav Modi and Mehul Choksi may be around $2 billion, over $204 million more than previously estimated. In a late night filing to stock exchanges on Tuesday, the state-owned lender said that “the quantum of reported unauthorised transactions can increase by USD 204.25 million."
The bank had earlier put the defrauded amount at Rs11,394.02 crore ($1.77 billion). Adding another Rs1,323 crore would take this to Rs12,717 crore. The probe into account books of Choksi’s companies also showed loans worth over Rs5,280 by a consortium of 34 banks led by ICICI bank, officials said.
In order to get further details on the loan and to get a clear trail of money used by Gitanjali group, the CBI also examined another noted banker, N.S. Kannan of the ICICI Bank, they added. When asked whether the loan will be part of the present probe, the officials clarified that the questioning of Kannan is more focused on getting financial profile of Gitanjali group of companies and how it was using the money borrowed from the banks rather than present case which relates to fraudulent issuance of guarantees.
The exposure of the ICICI bank in the loan is Rs773 crore. The bank is part of the consortium which also includes several private and public sector banks including the PNB. Two sitting general managers—Nehal Ahad handling international banking of the PNB and Vimlesh Kumar of Mumbai zone, where the alleged fraud was detected, are also being questioned by the agency, the officials said.
Firestar Diamond Inc. filed the Chapter 11 voluntary petition in the New York Southern Bankruptcy Court on Monday, according to the court filing. The case has been assigned to Judge Sean H. Lane and an “order for relief entered".
Firestar Diamond, which on its website states that its operations span the US, Europe, the Middle East, the Far East and India, blamed liquidity and supply chain challenges. It listed up to $100 million in assets and debt, the court document said. The court papers do not mention the name of its founder Nirav Modi or Mehul Choski. An e-mail sent to the company’s attorney Klestadt Winters Jureller remained unanswered.