Businessman Nirav Modi set up over 15 dummy companies overseas to divert funds received fraudulently from Punjab National Bank, the Enforcement Directorate has alleged. He diverted the funds to these companies “in the guise of export-import transactions”, the agency said in a complaint, according to The Indian Express.
The Enforcement Directorate had on May 24 filed its first chargesheet against the fugitive businessman and his associates in the Rs 13,000-crore Punjab National Bank fraud case. The 12,000-page chargesheet was filed in a special court in Mumbai under various sections of the Prevention of Money Laundering Act.
At least five Hong Kong firms that allegedly received Rs 8,270 crore of the funds were “run” by owners and directors getting only between Rs 8,000 and Rs 30,000 per month, the prosecution complaint said. The directors of these dummy companies were junior or former employees of Modi’s Firestar Group.
Kartik Doshi, who was listed as a director of Hong Kong-based Sino Traders, told the Enforcement Directorate that he was unaware of the firm’s business and had “never operated any bank accounts”. He claimed he resigned in 2014 as he “got afraid”. Firestar International sent him to Hong Kong two times and made him sign documents related to Sino Traders, he told the ED, according to the complaint.
The other dummy companies based in Hong Kong were Brilliant Diamonds, Eternal Diamond Corp, Fancy Creation Company and Auragem Company. Auragem Company received Rs 3,795 crore through Punjab National Bank’s letters of undertaking – the highest among the five companies.
These firms further diverted the funds to other companies owned by Nirav Modi in the United States, Belgium, India and the United Arab Emirates, the complaint said.
On February 14, the Punjab National Bank informed the Bombay Stock Exchange that it had detected “fraudulent and unauthorised transactions” worth Rs 11,380 crore at its Brady House branch in South Mumbai. A few officials of the public sector bank had allegedly issued fraudulent Letters of Undertaking to Modi’s companies. Some of them have been arrested and are under investigation.