ED charge sheets Nirav Modi, others for laundering Rs 4,299 cr bank funds

New Delhi: The Enforcement Directorate (ED) on Thursday filed its first charge sheet in the over USD 2 billion PNB fraud case involving diamantaire Nirav Modi and his associates stating that over Rs 4,299 crore of Rs 6,939.84 crore of bank funds were allegedly laundered abroad to dummy companies by him and others.

It alleged that a sum of USD 50 million, out of these monies, was "diverted" to Modi's father Deepak Modi who is reported to be based in Antwerp in Belgium.

Officials said an about 12,000-page charge sheet or prosecution complaint, with the operative part being about 80 pages, has been filed before a special court here under various sections of the Prevention of Money Laundering Act (PMLA).

"The court will soon take cognisance of the charge sheet," a senior official said.

A total of 24 accused have been listed in the charge sheet, filed under section 45 of the PMLA, including Nirav Modi, his father, brother Neeshal Modi, sister Purvi Modi, brother-in-law Mayank Mehta and the designer jewellers' firms--Ms Solar Exports, Stellar Diamonds and Diamonds R Us.

"These firms and Modi's Firestar group of companies had fraudulently obtained Rs 6,498 crore through Letters of Undertaking (LoUs) issued by the Punjab National Bank, Brady House branch in Mumbai," the central probe agency said in a statement.

The funds so obtained, it said, by the three were "partly utilised for payment to various overseas companies and also for offsetting earlier LOUs".

"It was revealed during investigation that the payments were made to 17 overseas entities in Hong Kong, Dubai and the USA since 2011 in the guise of export and import," the agency said in its charge sheet.

It added that its probe revealed that all these overseas firms are "dummy companies" of Nirav Modi and the directors and shareholders of these companies were "dummy directors" and were employees or ex-employees of Firestar group of companies who were working on directions of Nirav Modi and his other trusted officials-- Shyamsunder Wadhwa (Firestar vice president who was arrested by the ED in the case), Aditya Nanavati, Mihir Bhansali (US-based partner of Nirav Modi) and Saju Poulose.

It said the modus operandi of money laundering was to show manufacturing activities in these dummy overseas companies by over-valuing invoices and inflating balance sheets.

"The export and import was also not genuine and was just rotational transactions. The jewellery exported from India was dismantled and diamonds and pearls were taken out and the gold and silver was sent for melting," it said.

The melted metals, the ED said in the charge sheet, were re-exported to Dubai and India and diamonds and pearls were also separately re-exported to India.

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

"Till date, diversion of the proceeds of crime to the extent of USD 629.21 million has been traced to several group companies, relatives, other dummy companies under Nirav Modi's control," the ED said.

It added that on the basis of this information, the ED has sent Letters Rogatories (LRs) to 15 countries till now for seeking evidences.

The agency would soon file a second charge sheet against Modi's uncle and jeweller Mehul Choksi and his businesses, who are also accused in this case.

The ED had registered an FIR, called the Enforcement Case Information Report (ECIR), in this instance on February 14.

The CBI had also filed two charge sheets in this case early this month.

Nirav Modi, who is absconding and has not joined the ED probe in the case till now, and others are being probed under various criminal laws after the fraud came to light this year following a complaint by the Punjab National Bank that they allegedly cheated the nationalised bank to the tune of over Rs 13,000 crore, with the purported involvement of a few employees of the bank.

Both Nirav Modi and Choksi are said to have left the country before criminal cases were lodged against them.