New Delhi: Months after Interpol removed a Red Corner Notice (RCN) against fugitive diamantaire Mehul Choksi, the CBI has filed a fresh chargesheet against him for allegedly pledging lab-grown diamonds valued at 98 percent less than what was projected for getting a loan of Rs 25 crore from the IFCI in 2016, officials said.
In its chargesheet filed before a special CBI court in Mumbai recently, the Central Bureau of Investigation (CBI) alleged that Choksi’s firm Gitanjali Gems took the loan from the Industrial Finance Corporation of India (IFCI) by pledging 896 pieces of studded jewellery, which were valued at more than Rs 45 crore by government-approved valuers.
Once the loan account turned a non-performing asset (NPA), the IFCI moved to realise the pledged jewellery, but came to a rude shock after fresh valuations showed that their value was 98 percent less than what was projected at the time of applying for the loan, the officials said.
The fresh valuation done by the IFCI pegged the value of the jewellery in the range of Rs 70 lakh to Rs 2 crore, the chargesheet said.
“The valuers said the diamonds are of low quality and are lab-prepared chemical vapour diamonds and other inferior colour stones and not real gem stones. Accordingly, the account of Gitanjali Gems Limited was declared as fraud on November 30, 2018,” the chargesheet accessed by PTI said.
The opinion of the valuers gathered by the CBI during the probe also put the value of 896 pieces of jewellery in the range of Rs 69.32 lakh to Rs 76.99 lakh, the officials said.
The CBI recently filed a chargesheet against Gitanjali Gems, its former director and guarantor Choksi, government-approved valuers Narendra Jhaveri, Pradip C Shah, Shrenik Shah and Keyur Mehta, assistant vice-president of the company Vipul Chitalia and its assistant general manager Aniyath Shivraman Nair, they said.
Giving details of the money trail, the federal agency alleged that Rs 25 crore received by Gitanjali Gems on September 30, 2016 from the IFCI were diverted to Premier Intertrade through a cheque signed by Chitalia and Nair on the same day.
It alleged that the company, Premier Intertrade, existed only on paper with dummy partners and employees of Gitanjali Gems as signatories.
The whole amount was reverted to Gitanjali Gems in three tranches, the CBI said, adding that the entire exercise was carried out to change the “colour of the money”.
Choksi allegedly used Rs 20 crore to settle the foreign letter of credit (FLC) issued in favour of Hong Kong-based 4C’s Diamonds Distributors. The investigation showed that the Hong Kong-based firm was also controlled by Choksi and had no genuine business transactions with Gitanjali Gems.
The money was again routed back to Gitanjali Gems, the agency alleged.
The remaining Rs 5 crore were used to repay a fraudulent letter of undertaking (LoU) in the Punjab National Bank (PNB), discharge outstanding liabilities of Gitanjali Gems and towards miscellaneous expenses, the CBI alleged.
An independent body of lawyers under Interpol — the Commission for Control of Interpol’s Files (CCF) — removed Choksi’s name from theN list in November 2022 and it came as a major setback to the CBI. The removal of the notice means Choksi can now freely travel out of Antigua and Barbuda, where he is holed up after fleeing from India in 2018.
Choksi is accused of siphoning off more than Rs 6,344.96 crore from the PNB, using fraudulent LoUs and FLCs.
Officials at the PNB’s Brady House branch in Mumbai issued 165 LoUs and 58 FLCs during March-April 2017, against which 311 bills were discounted.
These LoUs and FLCs were allegedly issued to Choksi’s firms without any sanctioned limit or cash margin and without making entries in the bank’s central banking system to evade any scrutiny in case of a default.
LoUs are a guarantee given by a bank on behalf of its clients to a foreign bank. If a client does not repay to the foreign bank, the liability falls on the guarantor bank.
Based on these LoUs issued by the PNB, money was lent by State Bank of India-Mauritius, Allahabad Bank-Hong Kong, Axis Bank-Hong Kong, Bank of India-Antwerp, Canara Bank-Mamana and SBI-Frankfurt.
“Since the accused companies did not repay the amount availed against the said fraudulent LoUs and FLCs, the PNB made the payment of Rs 6,344.97 crore (USD 965.18 million), including the overdue interest, to the overseas banks, which had advanced buyer’s credit and discounted the bills against the fraudulent LoUs and FLCs issued by the PNB,” the CBI’s supplementary chargesheet in the PNB bank fraud case had alleged.