PNB Fraud: Enforcement Directorate traces Rs 5,000 crore money trail

New Delhi: It is been over a month and still counting since Diamond Merchant Nirav Modi scandal shook India with Rs 12,636 crore PNB money laundering scam and sleuths from the Enforcement Directorate (ED) probing the matter.

Now in a new twist, the ED has traced more than Rs 5,000 crore money channeled through shell companies all owned by Nirav Modi.

Based on the recent findings the ED is likely to level charges against billionaire Nirav Modi and his Uncle Mehul Choksi within a month said agency sources. The duo is currently staying in Hong Kong and the US as learned by ED.

The ED is likely to file a charge sheet which would help with the provisional arrest request and extradition of the accused in the country said the sources.

The duo had fled the country in January and the fraud to come to light in February.

“The layers of companies appear to be shell structures. In the case ED suspects the involvement of as many 40 shell structures,” said one of the person involved with the probing.

“Funds, instead of being directly transferred to overseas subsidiaries, have passed through at least two or more companies. And with loans not being refunded, such fund flow suggests mala fide intent. Even in previous fraud cases, we have come across similar modus operandi,” said the ED official.

“About half of Rs5,000 crore has come back to Modi and Choksi’s India-based firms as foreign investment or through hawala route,” the official added.

“The (foreign) ministry has sought the provisional arrest of Nirav Deepak Modi by the government of the Hong Kong Special Administrative Region, People’s Republic of China, for which a request has been submitted to them on 23 March 2018,” V.K. Singh, Minister of state in the ministry of external affairs, told the Rajya Sabha on 5 April.

Meanwhile, lawyers of Nirav and Mehul reiterated the duo is unable to travel to India since their passports have been suspended by the Indian Government.

According to the sources, the bulk of these so-called shell structures have been traced back to Hong Kong and Dubai.

The CBI has also expanded its probe to other Indian banks whose overseas branches were involved with an undertaking issued by PNB.

“The agency has observed the involvement of shell companies; that is why the examination of other banks has become necessary,” said a CBI official.

Meanwhile, the PNB managing director Sunil Mehta hopes the bank will restore back to normal in the next months. “The worst is behind us. Everything now seems to be under control as surgery is over, now we are in a recovery phase,” he said in an interview to PTI.