Nirav Modi bankruptcy files investigated
As part of the ongoing case where diamond tycoons Nirav Modi and Uncle Mehul Choksi are accused of fraud at the Punjab National Bank (PNB), the bankruptcy filings of Modi’s companies are under scrutiny.
The jeweller Nirav Modi has filed for bankruptcy for several of his companies namely Firestar Diamond Inc., A Jaffe Inc., and Fantasy Inc. The bankruptcy filings will be compared to the first information report (FIR) filed by the Central Bureau of Investigation (CBI) and the hope is that it will become clear how Modi was able to route the money it is believed that he fraudulently obtained.
The case has already become more challenging as, according to a Chapter 11 filing, Modi’s company A Jaffe owes over six million US dollars to unsecured creditors in the United Arab Emirates (UAE). These two firms are Pacific Diamonds and Tricolor Diamonds FZE.
However, Pacific Diamonds and Tricolor Diamonds FZE have also been listed as exporters in the CBI FIR filing which suggests there is more to the situation. The filing also states that the two companies benefited from the letters of undertaking (LoU) issued by PNB employees accused being complicit in fraud. Because Modi routed money to the two firms according to the CBI FIR but the firms routed money to Modi according to his bankruptcy filings, it is suspected that they two firms were used as conduits for Modi to move money around with. Suspicion has also been raised by the fact that A Jaffe sent huge loans to Modi whilst reporting even greater losses.
The case, which broke in February, saw the PNB report that a fraud had taken place worth around 11,400 crore rupees (approximately 1.7 billion US dollars) and the figure was recently revised to 12,600 crore rupees (approximately 1.9 billion dollars). After the scandal rocked the Indian fine jewellery industry to its core, investigations are still ongoing and Nirav Modi has not yet returned to Indian despite being ordered to do so by the CBI. As the Gem and Jewellery Export Promotion Council (GJEPC) are threatening the possibility of revoking Modi’s membership and high level executives have resigned from both Modi and Choksi’s jewellery businesses, the future looks uncertain for the duo.
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