The government said that a sum of Rs 82 crore (or $11.04) will be distributed among unsecured creditors including the PNB, following liquidation of the assets belonging to the Nirav Modi
group in the US.
"Further recovery therefrom is subject to other expenses and settlement of claims of other claimants," the ministry said.
In 2018, a group of companies
belonging to Nirav Modi
and Mehul Choksi
fraudulently secured loans worth Rs 14,300 crore. It was the biggest banking fraud in India.
The loans were allegedly issued by PNB
executives through SWIFT, a global messaging system. The fraud went undetected for seven years since the SWIFT was not integrated with PNB’s core banking system (CBS).
The corporate affairs ministry said it has initiated proceedings for disgorgement of monies from the entities promoted and/or controlled Modi and Choksi.
promoted by Nirav Modi - Firestar Diamond, Inc., M/s. A. Jaffee, Inc. and M/s. Fantasy, Inc. - had filed for bankruptcy in the Southern District court of New York. PNB
had requested the intervention of the government in a bid to realise its claims in the debtors’ assets.
The examiner appointed by the court had in its report in August 2018 explained the modus operandi of the fraud, and the manner in which the US-based employees of the debtors participated in the fraud.
"One prominent feature of the fraud was the apparent façade of independent companies, which were, in reality, entities promoted and/or controlled by Nirav Modi, that engaged in ‘round-tripping’ of the diamonds amongst themselves," the ministry said.
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