Gitanjali Group chief Mehul Choksi exported abysmally low quality goods at inflated prices to dummy companies abroad and the group’s books were manipulated by using third-party remittance system, the ED said in its chargesheet filed on Thursday in a Mumbai court.
The Enforcement Directorate also alleged that “fabricated debtors” were used to manipulate continuation or enhancement of credit limits.
“Goods exported to other countries were of abysmally low quality but their value was highly inflated. The valuation of exported/imported goods was decided by Choksi,” said the chargesheet filed in a special Mumbai court against Choksi and 13 others, including five companies, named in the Rs 13,500 crore Punjab National Bank (PNB) fraud case.
The financial probe agency also claimed that jewellery studded with diamonds or precious stones (in semi-finished form and of very poor quality) was exported to overseas dummy firms or firms directly controlled by Choksi in Hong Kong.
The ED named five overseas suppliers of Choksi — 4C’s Diamonds Distributors in Hong Kong, Shanyang Gong SI Limited in Hong Kong, Asian Diamonds and Jewellery FZE and Gitanjali Ventures DMCC in the United Arab Emirates and Abbeycrest Limited in Thailand.
“These were then dismantled by these Hong Kong-based dummy entities and diamonds or precious stones removed. The gold or silver thus obtained was melted at local melting units and converted into bullion,” it said.
According to the ED, Choksi used dummy companies such as Taipingyang Trading Ltd and Trans Exim Limited in Hong Kong, and Al Burj Diamond and Jewellery FZE, Asian Diamonds Jewelery FZE, Eternity Jewels FZE, and Al Arba Jewels FZE etc.
“The bullion and removed diamonds and other precious stones were then exported as raw material to India,” the agency alleged.
The agency also said that such consignments exported from India or Hong Kong were not getting cleared through the customs at the UAE airport and hence the same were exported ‘as it is’ to the next destination, that is, Hong Kong or India, as the case may be. “This was done only to insert one more layer in the movement of funds,” it said.
The ED chargesheet also alleged that “from April 1, 2014, to December 31, 2017, one Hong Kong-based beneficiary of Letters of Undertakings/Foreign Letters of Credit, namely 4C’s Diamonds Distributors, remitted Rs 12,184.10 crore from Hong Kong but in books only Rs 150.48 crore was shown and the remaining money was adjusted against goods exported to Trans Exim Ltd in Hong Kong”.
The agency said that its investigation revealed that of the Rs 23,382 crore remitted to Hong Kong from India between January 1, 2015, and December 31, 2017, Rs 3,004 crore was directly paid to foreign banks for repayment of earlier outstandings.
“While Rs 14,857 crore was remitted back via the Gitanjali Group companies in India to PNB for repayment of earlier dues, Rs 3,257 crore was diverted to the group companies overseas and Rs 105.72 crore remitted to India to other unrelated firms,” it said.
The ED said that it is investigating whether Rs 599 crore were diverted to other overseas companies with connections with the Gitanjali Group or Choksi.
The ED’s action comes in the wake of a money laundering case it filed against Choksi on the basis of a Central Bureau of Investigation (CBI) case. A Mumbai court has issued a non-bailable warrant against him.
The CBI approached the Interpol on June 11, seeking a Red Corner Notice against Nirav Modi and Choksi.
The CBI filed three FIRs between January and March to probe the PNB fraud. Most of the accused are common to these cases. The fraud was committed during 2011-17 through illegal issuance of LoUs/FLCs.
In its first chargesheet, the CBI alleged that diamond jeweller Nirav Modi, through his companies, siphoned funds totalling Rs 6,498.20 crore through fraudulent LoUs issued by the PNB’s Brady House branch in Mumbai.
Mehul Choksi, Modi’s uncle, allegedly swindled Rs 7,080.86 crore. Choksi and Modi left the country before criminal cases were lodged against them in February.
