Mumbai: Enforcement Directorate's probe in the Punjab National Bank (PNB) fraud case indicated that absconding diamond businessman Nirav Modi had allegedly controlled 17-odd shell firms, which conducted dubious export-import trade with his Indian firms in order to allegedly inflate the latter's turnover. The turnovers were inflated to let the firms allegedly acquire maximum credit facilities from the banks, said ED sources.
According to the ED probe, three of Modi's Indian firms had allegedly obtained '6,498 crore through fraudulent Lett-ers of Undertaking (LoUs) issued by PNB's Mumbai branch. LoUs are required to raise buyer's credit from overseas banks. “The funds obtained by said three entities were partly utilized 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 dummy companies controlled by the accused since 2011 in the guise of export-import,” said an ED source.
He further said, “The directors, shareholders on these dummy companies were employees or ex-employees of the accused's firm and worked as per his directions. The dummy firms were allegedly just mechanically transferring the goods and monies via dubious trading activities, without any economic rationale, logic and documents were obtained from overseas jurisdictions which proves the diversion and layering of the proceeds of crime,” said the source. “The modus operandi was fraudulent import-export wherein there were no manufacturing activities in any of the dummy overseas companies and the invoices of export, import were overvalued, so as to inflate the balance sheets and procure high credit facilities from the banks,” he said.
According to the source, “the trading was just rotational transactions” — the jewellery exported from India was allegedly dismantled and diamonds, pearls were removed and gold, silver were sent for melting. The melted metal was re-exported to Dubai or India and diamonds, pearls were also separately re-exported to India. ED had last week chargesheeted Modi and 23 others in the money laundering case.
