Links with Nirav Modi: SFIO probes 30 Maharashtra, Gujarat jewellers

Written by Khushboo Narayan | Mumbai | Updated: March 1, 2018

The government’s Serious Fraud Investigation Office (SFIO) is probing at least 30 jewellers from Gujarat and Maharashtra who have significant cash dealings with billionaire diamond jeweller Nirav Modi, accused of fraudulent transactions of over Rs 7,000 crore at Punjab National Bank (PNB).

According to sources, the SFIO is probing cash sales and purchases made by Modi through these jewellers. The SFIO also suspects that these jewellers were providing “bogus invoices” of purchase and sales for diamonds and pearls to Modi. These fake invoices, sources said, could have been used by Modi for availing maximum working capital limits from the consortium of lenders.

“The agency has identified 30 local jewellers from Surat and Mumbai who were dealing with Nirav Modi in cash. These jewellers are a crucial link in the case as they could have helped Modi in round tripping if any,” said a source.

The sources said while the case pertaining to Nirav Modi was related to banking fraud, the SFIO suspected Modi’s firms could be using fake invoices for circular trading of diamonds and precious stones or round tripping. According to diamond industry experts, a circular trade is carried out when the same parcel of stones is sold back and forth before entering the retail market.

“With buyer’s credit, the diamond traders who generally trade between close associates, effectively rotate the same consignment several times and by cleverly combing buyer’s credit with bank credit against export consignment, siphon funds for other investments,” said an expert, who did not wish to be named.

At least three firms of Modi and his maternal uncle Mehul Choksi, promoter of Gitanjali Diamonds, have come under the scanner of the CBI, Enforcement Directorate, income tax department and the SFIO for the alleged over Rs 12,500-crore fraudulent transactions at the PNB.

In its complaint to the CBI, the bank has claimed that its two employees had “fraudulently issued Letters of Undertaking (LoUs) and transmitted SWIFT instructions to the overseas branches of Indian Banks” to raise buyers credit for companies of Modi and Choksi without “making entries in the bank system”. PNB has alleged that the buyer’s credit availed against fraudulent LoUs were used either to retire import bills or replenish the maturing buyer’s credit of some other banks.

Reference

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