Officials investigating the Nirav Modi scam have said that the jeweller had planned to clear his outstandings by selling stake to a well-known foreign brand with which he was currently in talks and also by raising funds through an initial public offering (IPO).
Modi was understood to have been buying time from Punjab National BankBSE -2.64 % (PNB). His brother, who came from the US, was negotiating with the bank till the very end. However, the new batch of employees who had taken charge at PNB’s Brady Road branch, where the scam took place, sensed something amiss and reported the fraud to the CBI. After tallying the fraudulently issued Letters of Undertaking (LoUs), PNB officials filed a fraud case against Modi along with his relatives and others for defrauding the bank for Rs 11,300 crore.
Nirav Modi had been raising funds through his associate companies on the back of fraudulent LoUs, which were essentially bank guarantees, for seven years. He had managed to keep raising loans for up to one year and repay them through fresh loans.
Officials said that while Nirav Modi was trying hard till the last moment to gain a reprieve from the bank, his uncle Mehul Choksi sensed trouble a few months earlier and made all the requisite arrangements to relocate overseas.
The CBI has so far not questioned any family member. However, they arrived at these conclusions on Nirav Modi’s plans on the basis of statements and examination of documents, bank statements they have recovered during their probe.
“Mehul was already facing the heat from the market regulator for rigging his company’s (Gitanjali Jewellers) share prices in stock exchange, it was difficult for him to pull a fast one and attempt to raise funds,” said the official.
The CBI and ED have registered separate sets of cases of cheating and money laundering against Nirav Modi, Mehul Choksi, their family members and several companies associated with them.
