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Indian billionaire Nirav Modi in Rs2.8b cheating case

The diamond merchant, his brother and wife and a business partner have allegedly cheated Punjab National Bank out of more than Rs2.8b

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Diamond merchant Nirav Modi

New Delhi: The Central Bureau of Investigation (CBI) has booked billionaire diamond merchant Nirav Modi, his brother, wife and a business partner for allegedly cheating Punjab National Bank (PNB)  out of more than Rs2.807 billion (Dh161 million) during 2017, officials said.

The CBI has acted on a complaint from the PNB, which alleged that Modi, his brother Nishal, wife, Ami, and Mehul Chinubhai Choksi, all partners of Diamon R US, Solar Exports, Stellar Diamonds, were conspiring with bank officials and cheated it, causing "wrongful loss", the officials said.

The company has not responded to an email requesting comment.

"The public servants committed abuse of official position to cause pecuniary advantage to Diamond R US, Solar Exports, Stellar Diamonds and wrongful loss of Rs 280.70 crore [Rs2.807 billion] to Punjab National Bank during 2017," the first information report (FIR) has alleged.

The CBI has registered the FIR under the Indian Penal Code (IPC) sections related to criminal conspiracy, cheating and provisions of Prevention of Corruption Act against the four, an official said.

The bank has alleged in the complaint that a fraudulent issuance of Letters of Undertakings (LOU) took place on January 16, 2018, for and on behalf of the accused firms, which approached the bank and presented a set of import documents to the branch with a request to allow buyers' credit for making payment to overseas suppliers.

The bank officials requested the firms to furnish 100 per cent cash margin for LOU for raising buyers' credit. The firms contested this, saying that they had availed this facility in the past, the complaint, now a part of the FIR, has alleged.

However, branch records did not reveal details of any such facility granted to the said firm, it said.

The bank claimed that its deputy manager (now retired) Gokul Nath Shetty and Manoj Kharat had fraudulently issued LOUs without following the prescribed procedure by obtaining required request applications, documents and approval of authorities and without making any entries in the bank's systems.

The banks said they fraudulently issued eight LOUs totalling $44.2 million, equivalent to Rs2.807 billion, for Hong Kong-based Allahabad Bank and Axis Bank.

The bank alleged that it is making an "in-depth" inquiry to find outstanding LOUs that have not been detected in its system.

"While tracing old entries, it transpired that buyers' credit based on fake LOUs might also have been paid through NOSTRO A/C," it alleged.

Claiming that public money to the tune of Rs2.807 billion seems to have been "embezzled" by committing fraud, the bank asked the CBI to register the case.  

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