Nirav Modi
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Who Is Nirav Modi?

Born into a Gujarati family of diamantaires, Mr. Nirav Modi, the billionaire businessman caught in the middle of the controversy,  grew up in Belgium, which is known as the center for international refined diamond trade. Though he went to Wharton Business School, he dropped out and moved to India to train in the diamond trade under his uncle.

He is the founder and creative director of the Nirav Modi chain of diamond jewellery retail stores, and is the Chairman of Firestar International, the parent of the Nirav Modi chain, which has a flourishing retail business across top cities of the world including Delhi, Mumbai, New York, London, Hong Kong and Macau. In 2015, the inauguration of his first store in New York’s Madison Avenue was attended by Donald Trump,  Fortune India reported. Modi’s retail market presence has expanded in recent years marking him as one of the youngest Indians in the Forbes Billionaires List 2017 who was ranked 57 on the list.

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His designs have been worn to the Oscars by ‘Hidden Figures’ star Taraji P. Henson and to the Golden Globes by Dakota Johnson, among others. Last year, actor Priyanka Chopra was roped in as the global brand ambassador for the Nirav Modi collection.

How Was The Fraud Detected?

According to the complaint filed by PNB with the CBI on January 28, the fraudulent issuance of Letters of Undertakings (LOU) was detected at the Mid Corporate Branch, Brady House in Mumbai. Bloomberg Quint has reviewed the bank’s complaint, which is included in the first information report filed by the CBI on 31 January 2018. The FIR is available on the CBI’s website. A set of partnership firms — Diamond R US, Solar Exports, and Stellar Diamonds — approached the bank on January 16 with a set of import documents and requested for Buyer’s Credit to make payments to overseas suppliers. The firms have Nirav Modi, his brother Nishal Modi, Mr. Nirav’s wife Ami Nirav Modi, and Mehul Chinubhai Chokshi as partners.

While the initial complaint speaks of an amount of Rs 280 crore being involved in the alleged fraud, further internal investigations conducted by the bank showed that the amounts involved were much larger; said three people familiar with the matter.

This led the bank to issue a revised statement/complaint on 14th February 2018 saying that fraudulent transactions worth $1.77 billion had been detected. The bank had also intimated stock exchange BSE about the “fraudulent and unauthorized” transactions worth over $1.77169 billion in one of its branches in Mumbai

On digging further, the bank officials discovered that two of its employees had fraudulently issued LOUs in the past without following prescribed procedures and approvals. The employees had then transmitted SWIFT instructions to the overseas branches of Indian banks for raising Buyer’s Credit without making entries in the banking system to avoid detection.

The complaint also said that the funds so raised for the payment of the Import Bills have not been utilized for such purposes in many cases.

As per the FIR, five of the SWIFT messages (SWIFT is a messaging network used by financial institutions to securely transmit instruction) were issued to Allahabad Bank in Hong Kong and three to Axis Bank in Hong Kong.

CBI books Nirav Modi in Rs 280-crore ‘cheating’ case

In February 2018, Enforcement Directorate (ED) has registered a money laundering case in connection with the alleged 280 crores. Official sources said the agency filed the case under the Prevention of Money Laundering Act (PMLA) after going through a CBI FIR filed early this month. It is understood that the ED also went through the PNB complaint that was made out against Modi and others.

The CBI has booked diamond jeweler Nirav Modi, his wife Ami Modi, brother Nishal Modi and his maternal uncle Mehul Choksi in connection with an alleged Rs 280 crores. It had also raided the residence of Modi, his brother Nishal, wife Ami and Mehul Chinubhai Choksi, all partners of Diamond R US, Solar Exports and Stellar Diamonds and two bank officials — Gokulnath Shetty (now retired) and Manoj Kharat, who was also named in the FIR as accused.

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