Diamonds spotted in bank scam even in 1995, says Sivaraman

CHENNNAI: The Nirav Modi-Mehul Choksi bank robbery is not the first instance of the public exchequer getting hit by unscrupulous elements in the billion dollar Indian diamond trade. Not just that, the past sinners seem to have escaped the reach of the twisted arm of law. The same fate could happen in the present Nirav-PNB scam too, says former Union Revenue Secretary M. R. Sivaraman, the author of several tough measures to thwart the Indian corporate sector's big guns from financial felony - with a fair degree of success despite political pressures.

Disturbed by this latest Nirav-Choksi scam and the resultant recall of the unfinished case of the sensational 1994/95 raid on a Mumbai branch of the South Indian Bank by the Enforcement Directorate that unfolded a foreign exchange drain of over Rs.770 crore, which turned out to be linked to the 'famed' diamond industry, Sivaraman has now raised a RTI query with his former office seeking to know the status of its prosecution. 

Following a tip-off, the ED had raided the Andheri branch of the South Indian Bank and found sack-loads of currency stacked up in the strong room. Manager Ramanujam claimed that the money was towards import of electronic items but investigation showed that the Letters of Credit and other documents were all fake. The fraud occurred by producing fake bills for the goods that were never imported.

All the ‘bills of entry’ were bogus and stamped by the Customs. And even the Customs stamp was forged. It turned out that the money was actually dollar conversion inflow. The audit done by the Reserve Bank had not shown up anything amiss though the branch by then drained out close to Rs.200 crore worth of foreign exchange. 

“I checked with the heads of other banks and was shocked to find that they too had suffered similar drain. In all, over '700 crore worth foreign exchange would have been drained out. This was despite the stipulation that every bank branch should send monthly statements of foreign exchange dealings to the RBI”, Sivaraman told DC in an interview.

The ED had also arrested kingpin Harshad Mehta — not the stock exchange scam hero — in that case and tracked the spoor right up to a call girl in Hong Kong in whose name the huge money got deposited. The upright and brilliant ED officer Prem Kumar pursued the leads with vigour but came under “intense pressure”. It appears nothing came out of it all despite Sivaraman discussing the case agitatedly with his finance minister Dr Manmohan Singh and the matter being taken up to Prime Minister P.V. Narasimha Rao as well. And then came the revelation that the influential diamond industry was backing the suspects and the case got nowhere. “My information is that Prem Kumar left the IRS and is now practising law in Delhi”, said Sivaraman, sounding very bitter. He could not follow up the case at that time as he was shifted to USA on an IMF assignment.

Known for his high integrity and tough professional demeanor that got him a record four-year term as the revenue secretary — where the usual term is two years — Sivaraman is now a very worried man in his retirement years, seeing his hard labour going waste due to political influences and high corruption. 

“I see a disturbing similarity in that 1994/95 raid case and this present Nirav Modi case; both have the strong arm of the diamond trade backing”, said Sivaraman.