ED Files Charge-Sheet on PNB Scam, naming 24 people including Nirav Modi

The Enforcement Directorate (ED) filed a charge-sheet against fugitive diamond merchant Nirav Modi and 23 others, including his father, sister and brother-in-law, in the over Rs 13,400 crore Punjab National Bank (PNB) scam.

The fraud was committed during 2011-2017 by illegally issuing Letters of Undertaking (LoUs) and Foreign Letters of Credit (FLCs).

The charge-sheet or the prosecution complaint -- running in about 12,000 pages -- was submitted in a special court in Mumbai naming Nirav Modi, his sister Purvi Mehta, brother-in-law Maiank Mehta, brother Neeshal Modi, relative Nehal Modi, father Deepak Modi and 18 others.

Nirav Modi's three firms -- Solar Exports, Stellar Diamonds and Diamonds R US -- which had fraudulently obtained Rs 6,498 crore through LoUs issued by the Mumbai's Brady House Branch of PNB were also named in the charge-sheet.

The charge-sheet said the funds so obtained by these firms were partly utilised for payment to various overseas companies and also for offsetting earlier LoUs.

The diamantaire left India with his family around a month before PNB filed its first complaint with the Central Bureau of Investigation (CBI) in the fraud on February 29.

"It was revealed during investigation that the payments were made to 17 dummy overseas entities in Hong Kong, Dubai and the US since 2011 in the guise of export and import.

"The directors and shareholders in these companies were also dummy and were employed in Nirav's Firestar group of companies. They were working as per the directions of Nirav and his other trusted officials Shyamsunder Wadhwa, Aditya Nanavati, Mihir Bhansali and Saju Poulose," the charge-sheet said.

It said the dummy directors were just "mechanically transferring the goods and monies without any economic rationale and logic".

"Documents, obtained from overseas jurisdictions, prove the diversion and layering of the proceeds of crime."

"The modus operandi was fraudulent import and export wherein there were no manufacturing activities in any of the dummy overseas companies. The invoices were over valued to a huge extent so as to inflate the balance sheets and procure high credit facilities from the banks.

"The export and import was also not genuine and was just rotational transactions. The jewellery exported from India was dismantled, and diamonds and pearls taken out of it while gold and silver were sent for melting. The melted metal was re-exported to Dubai or India.

"The whole process was carried out without any substantial value addition and was only for inflating the turnover of Indian companies, so as to acquire maximum credit facilities from the banks," said the chargesheet.

The funds acquired by fraudulent means were siphoned off within the country as well as to the overseas dummy companies owned by Nirav Modi, the charge-sheet said, adding the agency traced diversion of the proceeds of crime to the extent of $629.21 million relating to several group companies.

The charge sheet has detailed the attachments made by the ED against Nirav Modi and his associates in the last few months after it first registered a money laundering case on February 14 based on the CBI's January 31 FIR. The ED's move comes days after the CBI filed two separate charge-sheets in the case.

It is expected that the ED would file a second charge-sheet against Nirav Modi's uncle and jeweller Choksi.