MUMBAI — A day after a massive $1.8 billion fraud was revealed in a Punjab National Bank branch here, the Enforcement Directorate Feb. 15 launched a nationwide raid on the offices, showrooms and workshops of billionaire diamond trader Nirav Modi.
ED teams swooped down and conducted simultaneous raids on Modi's offices, showrooms and diamond workshops in Mumbai, Surat and New Delhi.
According to sources, an unspecified quantity of stocks of gold, diamond and other precious stones worth several hundred crores of rupees were seized during the raids, along with incriminating documents, computer discs and other materials.
ED officials landed at the Firestar Diamonds Pvt. Ltd. head office in Bharat Diamond Bourse in the Bandra Kurla Complex, Modi's private office at Kohinoor City in Kurla West, his showroom and boutique at ITTS House in Fort, South Mumbai and a workshop in the Peninsula Business Park in Lower Parel.
In Gujarat, six diamond workshops were raided in Surat SEZ in the town of Sachin, as was an office in Belgium Towers on Ring Road, the hub of diamond jewelry trade.
Two of Modi’s diamond jewelry boutiques in New Delhi – in Chanakyapuri and Defense Colony – were also raided.
The multi-pronged action came a day after the PNB admitted unearthing a fraud of Rs. 11,515 crore involving Modi's companies and certain other accounts with the bank's flagship Brady House Branch in Mumbai, which is also the bank’s second largest lending window in India.
At least 10 bank employees have been suspended but it is not clear whether anybody from the crucial PNB credit approval committee or its board of directors figure among them.
The fraud, which includes money-laundering among other crimes, concerns the Firestar Diamonds group from which the CBI last week booked Modi, his wife Ami, brother Nishal Modi and their maternal uncle Mehul Choksi.
It followed a complaint lodged by PNB Jan. 29 pertaining to an alleged cheating case of Rs. 280 crore perpetrated by the four in 2011, by which time the accused had flown out of India on various dates to different locations worldwide.
Modi, along with other co-accused in the fraud, is absconding from India and the Central Bureau of Investigation issued a Look Out Circular against the four Jan. 31.
It has been that Modi – whose operations are spread across Europe, the U.S., Middle East and Far East, as well as India – has written to PNB and other banks saying he would return thee outstanding money.
This latest case – which involves a sum considerably higher than Vijay Mallya’s loan default of around Rs. 9,000 crore to Indian banks – comes at a time when the Indian banking system is already grappling with swelling non-performing assets.