Enforcement Directorate Seeks Fugitive Status for Nirav Modi's Brothers in PNB Scam
In a significant development in the ongoing Punjab National Bank (PNB) scam and related money laundering cases, the Enforcement Directorate (ED) has recently approached the special PMLA court with a crucial plea. The agency is seeking to declare absconding accused Nirav Modi's brothers, Neeshal and Nehal Modi, both Belgian nationals, as Fugitive Economic Offenders (FEOs).
Expanded Legal Action Against Multiple Accused
Alongside the Modi brothers, the ED has filed similar applications against two other individuals implicated in the case. These include Aditya Nanavati, a senior executive in the Firestar Group who managed operations for Nirav Modi's businesses in Hong Kong, and Sandeep Mistry, a director of one of Nirav's companies based in Hong Kong. The court is set to hear these pleas regarding the issuance of notices in the upcoming week.
This move follows the precedent set in December 2019 when Nirav Modi himself was declared a fugitive economic offender. He remains in custody in the United Kingdom, awaiting extradition proceedings.
Implications of the Fugitive Economic Offenders Act
Under the provisions of the Fugitive Economic Offenders Act, once an accused is officially designated as an FEO, their properties can be directly confiscated by the central government. In 2018, the ED initiated efforts to confiscate Nirav Modi's assets, leading to a landmark order in June 2020. This was the first such confiscation under the Act, with a special court directing the ED to attach Nirav Modi's properties.
Background of the PNB Scam and Key Allegations
The PNB scam, which came to light in 2018, involved fraudulent activities at the bank's Brady House branch in Mumbai. Gokulnath Shetty, a deputy manager, and Manoj Kharat, a single-window operator, are accused of circumventing standard banking protocols to issue unauthorized Letters of Undertaking (LoUs) to Nirav Modi and his associated companies.
It is alleged that they intentionally failed to record these transactions in the bank's internal systems, thereby avoiding detection while transmitting SWIFT messages to overseas branches of Indian banks. These messages were utilized to raise buyer's credit and fund PNB's Nostro accounts, ostensibly for import bills that, in many instances, were never settled. The total value of the LoUs issued in this manner is estimated at a staggering Rs 23,000 crore.
Entities and Conspiracy Involved
The unauthorized LoUs were issued on behalf of three firms: Diamond R US, Solar Exports, and Stellar Diamond. Investigations have revealed a purported criminal conspiracy between the bank officials and the partners of these firms, including Nirav Modi, his wife Ami Modi, brother Neeshal Modi, and uncle Mehul Choksi. This conspiracy is believed to have caused significant wrongful losses to PNB.
Following the registration of an FIR in 2018 under relevant sections of the Indian Penal Code and the Prevention of Corruption Act, the ED launched a probe into the money laundering aspects of the case. The total proceeds of crime, representing funds generated and laundered through this scheme, were quantified at approximately Rs 6,498.2 crore in 2018.
Specific Allegations Against the Accused
Nirav Modi is alleged to have siphoned off and laundered the defrauded money through various entities to overseas companies. His brother, Neeshal Modi, a partner in the three aforementioned firms, is accused of actively participating in appointing dummy partners for these companies in January 2016. He served as a signatory and beneficiary through complex British Virgin Islands structures and was involved with Dubai-based dummy companies between 2011 and 2013. Additionally, as a director of Firestar Diamond, he oversaw substantial transfers from Hong Kong-based companies.
Nehal Modi is accused of knowingly and intentionally assisting in the concealment of money laundering activities and destroying evidence. It is alleged that he personally ensured the elimination of all account records and influenced employees to cover up the fraud. Furthermore, he is suspected of dealing with proceeds of crime by taking 50kg of gold from Firestar Diamond in Dubai after the investigation into the fraud had commenced.
Legal Proceedings and Approver Status
On July 26, 2018, the court issued open-ended non-bailable warrants against eight individuals, including Nirav Modi, his two brothers, sister Purvi Modi, brother-in-law Maiank Mehta, and Aditya Nanavati, all of whom were absconding abroad. This order was granted at the ED's request, citing the impracticality of executing standard warrants within a specific timeframe due to the suspects having fled the country.
In a notable turn of events in January 2021, Purvi Modi, a Belgian national, and Maiank Mehta, a Hong Kong-based British national, turned approvers, becoming prosecution witnesses against Nirav Modi in the money laundering case. The court granted them pardon, marking a significant development in the legal proceedings.
