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What a rip-off!
March 09, 2018
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An official of India’s Punjab National Bank received gold and diamond jewellery from a billionaire jeweller accused of being involved in a $2 billion bank fraud, the federal police told a court on Saturday.

The state lender in January uncovered the alleged fraud in which several bank officials were suspected of colluding with jeweller Nirav Modi and his uncle Mehul Choksi to issue fraudulent letters of undertakings (LoUs), for their companies to raise loans from overseas branches of mostly Indian banks.

The Central Bureau of Investigation (CBI), which has arrested 14 people in the case, on Saturday for the first time said bribes were paid to at least one Punjab National Bank (PNB) official by Modi.

Punjab National Bank, the country’s second-largest state-run lender, announced it had been hit by a scam on a huge scale earlier last week.

Two employees, Gokulnath Shetty and Manoj Kharat, are suspected of steering fraudulent loans to companies tied to billionaire jeweller Nirav Modi, who owns the jewellery brand Firestar Diamond, and his uncle Mehul Choksi, chairman of jewellery retailer Gitanjali group.

In a statement issued on Wednesday, the bank said it had “detected some fraudulent and unauthorised transactions in one of its branches in Mumbai for the benefit of a few select accounts holders”.

Bank officials say the scam appears to have begun in 2011 and occurred at just one Mumbai branch.

Many of the details of the fraud remain unclear, including whether all the $1.8bn is missing or if some money may have been used to repay earlier loans.

Authorities have not publicly charged Modi and Choksi, but say they are under investigation for allegedly cheating the bank using fake documents.

The whereabouts of Modi is unknown, but Indian broadcaster NDTV reported on Friday he was at a hotel in New York, according to staff.

He has not yet commented on the claims and Firestar Diamond previously said the case was not connected to the company.

Modi, 47, is the owner of 17 jewellery boutiques around the world, with branches in Asia, India, the UK and the US.

His jewellery has been worn by Hollywood and Bollywood stars, including Kate Winslet and Priyanka Chopra.

According to Forbes, he is worth $1.74bn and is 85th on India’s rich list.

The agency told the court that Yashwant Joshi, who worked as a manager in the forex department of the Mumbai branch that is at the centre of the fraud, admitted to having received two gold coins weighing 60 grams and a pair of gold and diamond earrings from Modi.

The articles have been recovered from Joshi’s house in the presence of independent witnesses, the CBI said.

Modi and Choksi, who owns Gitanjali Gems Ltd, left India before the fraud came to light, but have said in letters and statements they were innocent.

The CBI, however, has expanded its investigation and arrested two internal auditors of the branch, among others.

Separately, Indian TV channels reported that another Mumbai court on Saturday issued non-bailable warrants against Modi and Choksi following an appeal by the Enforcement Directorate (ED), an Indian agency focused on foreign exchange and money laundering offences.

Agencies

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