PNB fraud: Shell firms, benami assets on the radar amid fresh raids on Nirav Modi, Choksi

A file photo of billionaire jewellery designer Nirav Modi. Photo: Aniruddha Chowdhury/Mint

A file photo of billionaire jewellery designer Nirav Modi. Photo: Aniruddha Chowdhury/Mint

Law enforcement agencies on Sunday said they were scrutinizing 200 shell companies and benami assets as they raided dozens more properties belonging to absconding jeweller Nirav Modi and his uncle and business partner Mehul Choksi, named in the Rs11,400 crore fraud at Punjab National Bank (PNB).

The Enforcement Directorate (ED) conducted searches across 45 locations in India as the crackdown against chief suspect Modi continued for the fourth straight day.

A notice reviewed by Mint showed the agency was conducting searches at properties in cities across India—including in Ahmedabad, Bengaluru, Chandigarh, Chennai, Delhi, Guwahati, Hyderabad, Kolkata, Lucknow, Mumbai and Patna.

The ED on Saturday conducted searches across 21 locations at premises belonging to Modi and Gitanjali Gems managing director Choksi, bringing the total value of the seizures to Rs5,674 crore.

Press Trust of India on Sunday cited an unnamed senior ED official as saying that the investigating agency and the income-tax department have zeroed in on 200 shell companies—both in India and overseas—that were being used to receive funds as part of the alleged fraud, in order to create benami assets in the form of land, gold and precious stones.

A day after the ministry of external affairs suspended the passports of Modi and Choksi on Thursday, the ED issued summons against the two men asking them to appear for questioning in Mumbai on 23 February.

As many as 29 properties belonging to Modi, his family members and companies that were provisionally attached by the income-tax department on Friday are also being assessed by the ED under the Prevention of Money Laundering Act, 2002.

“As the probe widens and more searches are conducted, more assets belonging to the accused will be attached under the money laundering act,” an official familiar with the developments said on condition of anonymity.

On Saturday, the Central Bureau of Investigation (CBI) arrested Gokulnath Shetty, a former deputy manager at PNB, Manoj Kharat, a single-window operator at the public sector bank, and Hemant Bhat, who was the authorized signatory of the Nirav Modi group.

A special CBI court in Mumbai later sent all three to police custody until 3 March.

Other than Shetty, Kharat and Bhat, CBI is also investigating the roles of three other PNB employees: Bechu B. Tiwari, a former chief manager at the state-owned bank’s Nariman Point branch in Mumbai; Sanjay Kumar Prasad, deputy general manager; and Mohinder Kumar Sharma, chief manager of the zonal audit office.

In its most recent complaint to CBI on 13 February, PNB, highlighting the involvement of some of its officials, said, “They have fraudulently issued letters of undertaking (LoUs), without following the bank’s prescribed procedures… and without making entries in the banking system, avoiding detection of the transactions… transmitted SWIFT instructions to the overseas branches of Indian banks under buyer’s credit.”

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