India’s Central Bureau of Investigation (CBI) on Tuesday made important arrests in connection with the $1.76 billion years-long loan fraud committed by billionaire diamond merchant Nirav Modi with the help of some officials of the Punjab National Bank (PNB), PTI reports.
CBI on Tuesday arrested Vipul Ambani (pictured), the president (finance) of Modi’s Fire Star Diamond, along with executive assistant Kavita Mankikar and senior executive Arjun Patil based on the first FIR (first information report) filed by the investigation agency.
Vipul belongs to India’s big business family of Ambanis. He joined Firestar three years ago.
The FIR says 150 letters of undertaking (LoUs) worth Rs 64.98 billion are under investigation. LoU is a guarantee given by an issuing bank (PNB, in this case) to Indian banks (six, in this case) having branches abroad to grant a short-term credit to the applicant (Modi).
In case of default, the bank issuing the LoU has to pay the liability to the credit-giving bank along with accruing interest.
Mankikar was also the authorised signatory of three firms — Diamond R US, Stellar Diamond, Solar Exports — listed as accused in the FIR registered on January 31.
Modi, his wife Ami, brother Nishal, and uncle, Mehul Choski, were also named as accused in the FIR. All of them fled the country in the first week of January.
The remaining two — Kapil Khandelwal, the CFO of Nakshatra group and Gitanjali group, and Niten Shahi, the manager of Gitanjali group — were arrested on Tuesday in connection with the second FIR registered by the agency on February 15 against Choksi and his three companies.
The investigation in this case involves 143 LoUs worth Rs 48.86 billion fraudulently issued by officials of PNB’s Brady House branch in Mumbai.
The CBI on Tuesday questioned an executive director of the PNB along with nine other officials in connection with the issuance of Rs 114 billion worth of guarantees to Modi and Choksi.
The analysis of documents recovered during raids led CBI on Tuesday to a farmhouse in Alibaugh where Modi hosted celebrities from the business world and Bollywood. The agency conducted searches at the farmhouse in the afternoon.
Finance minister blames auditors
India’s Finance Minister Arun Jaitley finally broke the silence on PNB fraud by saying the government will chase the cheaters to the end.
He blamed the lender for its failure to check the delinquents. Without naming the alleged kingpin of the fraud or the bank, Jaitley questioned the ethics of some businesses in the country and wondered why the bank’s internal and external auditors could not detect the fraud which had been going on for seven years.
He said ethical behaviour is not followed by a section of businesses in India. Banks operate on trust and this is more so when it comes to lender-creditor relationship. But some who take loans from banks think it is not their responsibility to pay back.