Mumbai: The Enforcement Directorate (ED) recently moved the special PMLA court to declare absconding accused Nirav Modi‘s brother, Neeshal and Nehal Modi, both Belgian nationals, as ‘Fugitive Economic Offenders’ in the Punjab National Bank (PNB) scam and related money laundering cases.Alongside the Modi brothers, the ED also moved similar pleas against two other accused in the case, Aditya Nanavati, senior executive in the Firestar Group, who was managing operations for Nirav’s businesses in Hong Kong and Sandeep Mistry, director of one of Nirav’s companies in Hong Kong. The court will hear pleas on the point of issuance of notice next week.Nirav was declared a fugitive economic offender (FEO) in December 2019. He is currently in custody in the UK.Under the FEO Act, once an accused is declared as an FEO, his or her properties can be confiscated directly to the central government. ED had, in 2018, sought confiscation of Nirav’s properties. In the first order of confiscation under the Act, a special court had directed in June 2020 that Nirav’s properties be attached by ED.Gokulnath Shetty, a deputy manager at PNB’s Brady House branch, and Manoj Kharat, a single-window operator, are accused of bypassing standard banking protocols to fraudulently issue Letters of Undertaking (LoUs) to Nirav Modi and his companies. It was further alleged that intentionally failing to record these transactions in the bank’s internal systems, they avoided detection while transmitting SWIFT messages to overseas branches of Indian banks. These messages were used to raise buyer’s credit and fund PNB’s Nostro accounts, ostensibly for import bills that, in many instances, were never actually paid. A total of LoUs worth Rs 23,000 crore were allegedly issued. The unauthorised LoUs were issued on behalf of three firms: Diamond R US, Solar Exports, and Stellar Diamond. It was alleged that there was a criminal conspiracy between the bank officials and the partners of these firms — Nirav, his wife Ami Modi, brother Neeshal and uncle Mehul Choksi. This caused wrongful losses for PNB.In 2018, an FIR was registered under the relevant sections of the Indian Penal Code and the Prevention of Corruption Act. Subsequently, the ED probed the money laundering allegations. The total proceeds of crime, the funds generated and laundered through this scheme, were quantified at approximately Rs 6,498.2 crore in 2018.Nirav is alleged to have siphoned off and laundered the defrauded money through various entities to other overseas companies. Neeshal, a partner of Diamonds R US, Solar Exports and Stellar Diamond, is accused of actively participating in appointing dummy partners on these three firms in Jan 2016. He was a signatory and beneficiary through complex British Virgin Islands structures, in some of the Dubai-based dummy companies in 2011-2013. He was also director of Firestar Diamond in which huge sums were transferred from Hong Kong-based companies. The proceeds of crime generated through the act is alleged to have been siphoned off and laundered to various overseas companies.Nehal is accused of knowingly and intentionally participated in assisting the activity of concealment of money laundering and destroying the evidence. It was alleged that he was personally overseeing that all the accounts recorded were eliminated and was influencing employees. He allegedly dealt with proceeds of crime by taking 50kg gold from Firestar Diamond in Dubai after the initiation of investigation in the fraud.On July 26, 2018, the court issued open-ended non-bailable warrants against eight, including Nirav, his two brothers, sister Purvi, brother-in-law, Maiank Mehta, and Nanavati who were absconding abroad. The order was granted following a request from ED, which argued that standard warrants were impossible to execute within a specific timeframe given that the suspects had fled the country.In Jan 2021, Purvi, a Belgian national, and Maiank, a Hong Kong-based British national, turned approvers — prosecution witnesses — against Nirav in the money laundering case. The court granted them pardon in the case.
