Nirav Modi is a fugitive Indian businessman who was in the business of luxury diamond jewellery. He is the founder of Nirav Modi chain of diamond jewellery retail stores.
Modi is being investigated in the $2 billion Punjab National Bank (PNB) fraud case. He was charged by the Indian government for criminal conspiracy, criminal breach of trust, cheating, corruption, money laundering, fraud, embezzlement and breach of contract in August 2018 in the PNB scam case.
What was the PNB scam?
The case relates to fake letters of undertaking (LoUs) issued by PNB bank at its Brady House branch in Fort, Mumbai. The scam was allegedly organised by Nirav Modi, his wife Ami Modi, brother Nishal Modi, and Uncle Mehul Choksi who also fled the country in 2018. They were helped by PNB bank employees and directors in Nirav Modi’s firm.
The LoUs were opened in favour of branches of Indian banks for the import of pearls for a period of one year, for which Reserve Bank of India guidelines lay out a total time period of 90 days from the date of shipment.
This guideline was ignored by overseas branches of Indian banks. They failed to share any document/information with PNB, which was made available to them by the firms at the time of availing credit from them.
Nirav Modi got his first fraudulent guarantee from PNB on March 10, 2011 and managed to get 1,212 more such guarantees over the next 74 months.
PNB employees misused the SWIFT network to transmit messages to Allahabad Bank and Axis Bank on fund requirement. While all this was done using SWIFT passwords, the transactions were never recorded in the bank’s core system — thereby keeping the PNB management in the dark for years.
How did the PNB scam unfold?
PNB alleges associates of three firms — Diamond R US, M/s Solar Exports and M/s Stellar Diamonds — approached the bank to make payment to its overseas suppliers. The bank demanded that it will need at least a 100 per cent margin for issuing LoUs. However, the firm said they have received LoUs in the past without any such guarantees. Branch records showed no such request was granted to the firms. This made the bank suspect there could be a fraud which led to them digging further into the transaction history. The bank filed a complaint with the CBI on January 29, 2018 against Nirav Modi, Ami Modi, Nishal Modi and Mehul Choksi along with two PNB employees for cheating and causing wrongful loss.
Nirav Modi in hot water after PNB scam unfolds
In 2018, Nirav Modi applied for bankruptcy protection in Manhattan, New York. In May 2018, Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED) registered FIRs against him. It is said that Modi fled the country before criminal charges were filed against him. In June 2018, it was reported that Modi was seeking political asylum in Britain. In March 2019, Modi was arrested in central London by UK authorities.
In 2019, Swiss authorities froze a total of $6 million in Modi’s Swiss bank accounts.
He was also being sued by the state of California in the US for defrauding Los Angeles entrepreneur Paul Alfonso.
The PNB scam is said to be the biggest fraud case in India’s banking history and is worth over Rs 14,000 crore. Till now, government authorities in India have attached several thousand crores worth of properties. Modi’s brand and fortune, both have collapsed. He ranked 57th in the Forbes list of billionaires in 2017. His current wealth is estimated to be less than $100 million.
Where is Nirav Modi currently?
A UK court, on February 25, 2021, allowed the extradition of Modi to India. UK’s Home Secretary Priti Patel signed the extradition order, clearing the path for his extradition. Modi has appealed the court order alleging he won’t receive a fair trial in India. Currently, Modi is in jail at the Wandsworth Prison in south-west London.
Nirav Modi's early life
Modi was born in Gujarat’s Palanpur and grew up in Antwerp, Belgium. He belongs to a family that has been in the diamond business for several generations. When he was 19, Nirav and his father Deepak Modi moved to Mumbai to work in his uncle Mehul Choksi’s business, who was the head of the Gitanjali Group, a retail jewellery group. Nirav Modi attended the Wharton School at the University of Pennsylvania. He later dropped out.