Nirav Modi to make another bail plea in UK court on May 8

Fugitive diamond merchant Nirav Modi would make another bail plea on May 8 at the UK court where he is undergoing extradition proceedings to India in the Punjab National Bank (PNB) fraud and money laundering charges amounting to up to USD 2 billion.

The 48-year-old, who has been behind bars at Wandsworth prison in south-west London since his two previous bail applications were rejected following his arrest on March 19, is to appear before Chief Magistrate Emma Arbuthnot at Westminster Magistrates’ Court here on May 8 for a third attempt.

“The next hearing will be on 8 May. The application for bail will be heard before Judge Emma Arbuthnot at Westminster Magistrates’ Court,” said a spokesperson for the Crown Prosecution Service (CPS), which is representing the Indian authorities in the extradition case.

Barrister Nick Hearn from Furnival Chambers will represent the CPS at the bail hearing, while Modi will be represented by Clare Montgomery of Matrix Chambers.

At the last hearing in the case on April 26, when Modi had appeared before Judge Arbuthnot via videolink from prison, his legal team had made no application for bail and he was further remanded in judicial custody until May 24. While his two previous bail pleas have been rejected on the grounds that there was a “substantial risk he would fail to surrender”, he can make a third application if there is a considerable change in circumstances.

Modi is reportedly relying on “new evidence” and will seek to persuade the judge that this constitutes a change of circumstances so that he can be permitted to make another bail application next Wednesday.

His legal team, led by solicitor Anand Doobay, have previously offered one million pounds as security alongside an offer to meet stringent electronic tag restrictions on their client’s movements, “akin to house arrest”. It remains to be seen how they plan to bolster the application for a third attempt before the same court.

“This is a case of substantial fraud, with loss to a bank in India of between USD 1-2 billion. I am not persuaded that the conditional bail sought will meet the concerns of the government of India in this case,” Judge Arbuthnot had said, when rejecting Modi’s last bail attempt.

She also noted that “very unusually in a fraud case” the accused had made death threats to witnesses and also attempted to destroy evidence in the case. The diamond dealer’s “lack of community ties” in the UK and an attempt to acquire the citizenship of Vanuatu in late 2017 went against him as the judge said it seemed like he was trying to “move away from India at an important time”.

Montgomery, Modi’s barrister, had made a series of offers to try and convince the judge to grant bail, even bringing up his pet dog.

“He did have a son at Charterhouse [school in London] who has now gone to university in the States and as a sign of ageing parents, led Mr Modi to get a dog instead. None of these actions are emblematic of someone setting out to flee the country,” she had claimed.

“It is nonsense to say that he is a flight risk. He does not have a safe haven open to him and he has not travelled or applied for citizenship elsewhere he only qualifies for leave to remain in this country, she said.

Modi was arrested by uniformed Scotland Yard officers in central London on March 19. During subsequent hearings, Westminster Magistrates’ Court was told that Modi was the “principal beneficiary” of the fraudulent issuance of letters of undertaking (LoUs) as part of a conspiracy to defraud PNB and then laundering the proceeds of crime.

At the hearing last week, the court was told that May 30 had been tentatively fixed as the first case management hearing in his extradition case. It remains to be seen how the case will progress after the new bail plea next week.

RBI did not do proper auditing: CVC on PNB fraud

Central Vigilance Commissioner K V Chowdary today said the Reserve Bank of India (RBI) had apparently not conducted an audit during the period of time when a Rs 13,000-crore scam hit the Punjab National Bank.

Chowdary stressed the need to put into place a more robust auditing system.

“They did not do this (an audit),” the head of the probity watchdog told PTI.

The CVC exercises superintendence over the CBI which is looking into the over Rs 13,000-crore PNB fraud case.

The RBI had the regulatory responsibility for the banking sector but any lack of integrity would be looked at by the Central Vigilance Commission, he added.

Chowdary said according to the RBI, it had switched over from a periodic audit to a “risk-based” audit which is conducted when there is a financial risk involved.

“To determine risk, they must have some parameters. Based on that they would have done that (auditing). (But) there was no apparent audit by the RBI during this period (of fraud),” Chowdary said.

Union Finance Minister Arun Jaitley had in February slammed regulators for failing to detect the fraud, saying that unlike politicians, regulators in the Indian system were unaccountable.

Chowdary pointed out that the RBI issues general guidelines as a regulator and also when foreign exchange is involved.

“They are not going to see from branch to branch and bank to bank what they are supposed to do,” he said.

It was primarily the responsibility of the banks to ensure that their business was conducted in a proper and ethical way, he added.

He said when something goes wrong, “one cannot blame everybody”.

“There is a systemic issue (here). They (RBI) have decided instead of every year or every once in two, three or four years, they will do it (risk-based auditing).

“It is a good policy. But how they determine the risk parameters… and why this (fraud) did not come up are matters of detail,” Chowdary said.

He, however, clarified that it was not just the PNB where an alleged fraud had taken place or that other banks were “100 per cent correct”.

“But we have to only hope that they (the other banks) have a better system and that they are following the system,” Chowdary said.

On a bank’s role in checking frauds, Chowdary said there are “no timelines” when it comes to deeper decision making processes.

“There should be defined timelines. The preventive vigilance mechanism has to be strengthened. The guidelines and operating procedures have to be strengthened. It has to be ensured that they are followed,” he said.

Asked about the investigation in the PNB scam, he said what the CVC was doing in the case could not be disclosed now as “it is work in progress”.

“There are so many issues that the CVC is examining both with reference to processes set in motion by the RBI,” Chowdary said.

The CBI is among various agencies looking into the over Rs 13,000-crore fraud allegedly committed by billionaire jeweller Nirav Modi and his uncle and Gitanjali Gems promoter Mehul Choksi.

Finance Minister Arun Jaitley slams regulators’ failure to detect PNB fraud

Finance Minister Arun Jaitley today slammed regulators for failing to detect the Rs 11,400-crore fraud at Punjab National Bank for seven long years, saying unlike politicians, regulators in the Indian system are unaccountable.

Speaking on the scam for the second time this week, he said employees conniving with fraudsters is worrisome. Also worrisome is that no red flag was raised.

Regulators should have a “third eye” open to detect and check such frauds.

Speaking at the ET Global Business Summit, he said the industry needs to get into the habit of doing ‘ethical’ business as such frauds are “scars” and push reforms and ease of doing business to the background.

Unethical behaviour in the lender-borrower relation has to end, he said. “If needed laws will be tightened further to punish delinquent persons.”

He also slammed bank management for failing to do their job saying inadequate supervision and top management being unaware of what was going on in the bank was worrisome.

PNB fraud : Vipul Ambani and 5 others in CBI custody till Mar 5

A special court here today remanded Vipul Ambani, the president (finance) of Nirav Modi’s Fire Star Diamond, and five others in CBI custody till March 5 in connection with the Rs 11,400 crore alleged fraud in Punjab National Bank (PNB).

The six were arrested yesterday in connection with two FIRs registered by the CBI involving Modi and his uncle Mehul Choksi, the owner of Gitanjali Gems.

The FIRs are related to fraudulent issuance of 150 Letters of Undertaking (LoU), a kind of bank guarantee, worth Rs 6,498 crore and 143 LoUs worth Rs 4,886 crore, issued during 2011-17.

Ambani, Kavita Mankikar (executive assistant and authorised signatory of three firms–Diamond R US, Stellar Diamond, Solar Exports), Arjun Patil (senior executive, Firestar group), and Rajesh Jindal, the then head of the Brady House branch of PNB, were listed as accused in the FIR registered by the CBI on January 31.

Those arrested in connection with Choksi’s firms are Nakshatra group and Gitanjali group CFO Kapil Khandelwal and Gitanjali group manager Niten Shahi.

The six were remanded in CBI custody till March 5 by Special Court Judge S R Tamboli.

While seeking Shahi’s custody, the CBI said he fabricated applications and related documents for issuance of purported LoUs for fraudulently availing buyers credit from PNB.

Shahi claimed that all documents were prepared and submitted to Shetty at the instance of one Vipul Chatalia, it said, adding that he was evasive on what was done with the documents once the transactions were completed.

“It is understood that Shetty was returning the set of documents without making the entries in their books although the corresponding SWIFT messages were conveyed to the overseas bank”, the agency said.

According to the CBI, “there is every reason” to believe that Shahi had actively participated in the conspiracy and was aware of other conspirators, the modus operandi adopted and of the end-use of defrauded funds.

On Khandelwal’s role, the CBI said he was reporting to Choksi and was privy to all transactions, including the illegal ones.

“He admitted that he was looking after various credit limits that were extended to the companies by PNB. During examination, he stated the companies were only undertaking transactions, including imports, against credit limits sanctioned to them,” the CBI said.

Special Public Prosecutor Limosin A told the court that they had to unearth how and where these documents for the issuance of LOUs and FLCs were prepared.

He said the agency wanted to recover the documents relating to issuance of LOUs which were handed back by Shetty after transactions and unearth utilisation of the proceeds of the defrauded amount.

“We have to identity other accomplices involved, identify the modus operandi, and to ascertain how many other banks have been defrauded”, said Limosin.

On Ambani’s role, the agency said being the finance department’s head from May 2013 to November 2017, he was aware of the fraudulent and illegal LOUs which were being issued by Shetty in conspiracy and guidance of Modi and other employees.

He was visiting and meeting not only the Brady House branch officials of PNB but also the officials of its circle and zonal offices.

“Ambani’s knowledge of the fraudulent transactions is proved from the fact that during searches at his office, the applications of fraudulent LoUs made to PNB by the three firms of Nirav Modi were seized,” the CBI stated in its remand application.

“The documents and circumstances prove his (Ambani’s) knowledge of the fraudulent applications for LOUs being made in the same premises of Firestar group companies.

“They also prove deliberate acts of omission by Ambani by not protesting the issuance of such fraudulent LoUs that led to the continuance of concealment and large-scale fraud in this case of PNB and loss and diversion of thousands of crores of public funds. This fact prove his part in this sinister conspiracy to cheat PNB,” the agency said.

On Mankikar’s role, CBI said she was the authorised signatory of Modi’s firms that fraudulently obtained LoUs from PNB for the issuance of buyers credit.

“She had fraudulently signed the applications for issuance of the LoUs. She told the agency that she was signing documents as per Modi’s instructions without knowing facts or ramifications of her actions,” the CBI said.

According to the CBI, Patil had prepared the application submitted to PNB in the name of Modi’s firms for issuance of buyers credit. “He has not disclosed how and where such applications were fraudulently prepared,” the agency said.

Seeking remand of Jindal, the CBI said they questioned him about the LoUs issued during his tenure in 2010-2011. “He allowed Shetty to continue issuing LoUs without following existing banking procedure, policy guidelines of PNB and RBI,” it said.

Opposing the custody of the accused, defence lawyers told the court that they had revealed to the CBI whatever they knew.

PNB fraud: Centre opposes plea for SIT probe

The Centre today opposed in the Supreme Court a PIL seeking an independent probe and deportation of billionaire jeweller Nirav Modi in the over Rs 11,000 crore PNB fraud case, saying an FIR has been lodged and a probe was on.

A bench comprising Chief Justice Dipak Misra and Justices A M Khanwilkar and D Y Chandrachud said it would not say anything on the matter now and listed the PIL filed by lawyer Vineet Dhanda for further hearing on March 16.

Attorney General K K Venugopal, appearing for the Centre, said he was opposing the PIL on various grounds, including that an inquiry has started after the FIR was registered.

The PIL has made Punjab National Bank, Reserve Bank of India and the ministries of finance and law and justice as parties. It has sought a direction for initiation of deportation proceedings against Nirav Modi and others allegedly involved in the banking fraud, preferably within two months.

The plea has asked for a special investigation team (SIT) to probe the banking fraud, allegedly involving billionaire jewellers Nirav Modi and Mehul Choksi. It has also sought a probe into the role of the top management of the Punjab National Bank (PNB).

The CBI has already registered two FIRs — one on January 31 and another a few days ago — against Nirav Modi, his relative Mehul Choksi of Gitanjali Gems and others for allegedly defrauding the PNB of about Rs 11,400 crore.

The plea has sought a direction to the finance ministry to frame guidelines on the grant and disbursal of loans involving big amounts.

“Issue an appropriate writ, order or direction directing the Finance Ministry and the RBI to frame guidelines in granting of the loan of the 10 Crores and above to ensure safety and recovery of such loans,” the PIL has said.

It has also sought the setting up of an experts’ body to deal with cases of bad banking debts in the country. Besides, the petition seeks framing of rules for the recovery of loans from the defaulters within a stipulated period, even by attaching their properties and auctioning them in the open market.

In his PIL, Dhanda has asked for a direction to fasten liabilities on the employees of a bank for sanctioning loans on the basis of deficient documents and said loans should also be recovered by attaching the properties of such bank officials even after their retirement.

Another plea filed by Sharma on a similar issue has not come up for hearing yet.

Sharma, in his plea, has said the SIT should consist of retired judges of the apex court and said that the banking fraud has caused serious injury to the general public and the state’s treasury. It should be investigated not by an agency “being controlled by the political leaders/authorities”, he has said.

The plea has alleged that loans were issued in the case without following RBI’s financial rules and regular systems.

Source : PTI

CBI begins questioning of Rotomac owner Vikram Kothari

The CBI today started questioning of Rotomac owner Vikram Kothari at its Headquarters here in connection with alleged loan default of Rs 3,695 crore towards a consortium of seven nationalised banks, officials said here.

Earlier, Kothari was being questioned in Kanpur where his company and residence is located, they said.

He was called here by the agency which started his questioning at its headquarters, they said, without giving any reasons behind the move.

Kothari, his wife Sadhana, and son Rahul, all Directors in Rotomac Global pvt Ltd, have allegedly diverted the bank loans towards purposes other than they were meant for, officials said.

One of the consortium members, Bank of Baroda had approached the CBI requesting an FIR against Kothari as the bank apparently feared he might leave the country, they said.

The CBI registered a case on February 18 after receiving the complaint. Initially, the alleged scam was estimated to be of Rs 800 crore but after the CBI started probe into the accounts of the Rotomac Global Private Limited,it was found that the company had allegedly taken loans from Bank of India, Bank of Maharashtra, Indian Overseas Bank, Union Bank of India, Allahabad ank and Oriental Bank of Commerce.

The CBI alleged that the accused had cheated a consortium of seven banks by siphoning off bank loans to the tune Rs 2,919 crore. The total outstanding amount along with interest and liabilities for the company were pegged at Rs 3,695 crore, the probe agency alleged.

Yesterday, the Enforcement Directorate (ED) had notified all the land, sea and airports in the country to prevent the exit of the promoter of Rotomac pens, Vikram Kothari, and his family members from India, in connection with its money laundering probe.

The agency also conducted searches at multiple locations in Uttar Pradesh, including in Unnao and Kanpur, to gather evidence in the case.

The ED had slapped criminal charges under the Prevention of Money Laundering Act (PMLA) against the company and its promoters on February 18, based on a CBI FIR filed on the same day.

Meanwhile, the Income Tax department had also attached 14 bank accounts of the pen manufacturer as part of its tax evasion probe against the company yesterday.

This is the second major bank fraud to surface in the recent past after the sensational Rs 11,400-crore Punjab National Bank (PNB) fraud, allegedly committed by diamond merchant Nirav Modi and his uncle Mehul Choksi, who is a promoter of the Gitanjali Group of companies.

Both Modi and Choksi left the country last month.

Bank under obligation to protect consumers interests: Forum

Bank under obligation to protect consumers interests: Forum
Bank under obligation to protect consumers interests: Forum

The Mumbai Consumer Redressal Forum has directed the Punjab National Bank not to close the account of a lawyer over alleged rude behaviour.

It also asked the lawyer, a senior citizen, to maintain cordial relations with the bank.

“The opponent bank is not entitled to close account of complainant,” the forum ruled after Harish Bhatia approached it, saying the bank had threatened to close his account of 30 years.

Bhatia said during a visit to the Kandivli branch of the bank in May 2011 he saw an unknown person giving orders to customers. He said when he complained about it to the authorities concerned, he found their approach very casual.

Bhatia told the forum that there was exchange of letters between him and the bank, and later he was threatened with closure of the account.

He had approached the forum seeking a direction to the bank not to discontinue his account and seeking a compensation of Rs 25,000.

The bank denied all the allegations before the forum and said Bhatia, a practising lawyer, behaved in an uncivilised manner.

“We have carefully perused the documents filed on record. The letter sent by the bank to the complainant (about closing his account) is not justified.

“There is no evidence on record to justify the said notice. The single instance which occurred due to provocation is not sufficient for parting relationship as consumer,” observed the bench of forum president SD Madake and member SV Kalal.

The relation between the complainant and the bank is based on trust. The bank is under an obligation to protect the interests of consumers and render all possible help when he enters in the bank premises, the forum said.

“Bhatia being an old customer of bank and an experienced lawyer was under an obligation to promote fair and cordial relationship with the bank,” the forum observed.

“We are of the view that Bhatia failed to have patience at the relevant time as a result of which the relations came under strain. The bank is entitled to take reasonable steps as per law, if aggrieved by conduct of the complainant, but complainant cannot be denied his right to operate his account,” it said.

( Source – PTI )

BCCI-Nimbus row: SC asks banks to deposit Rs 400 cr

The Supreme Court today asked three nationalised banks to deposit Rs 400 crore towards securing the claim of BCCI in a dispute over termination of the Rs 1,600-crore contract between the cricket board and Nimbus Communications, pending the hearing of their dispute.

A bench of Justices Aftab Alam and Ranjana Desai asked Punjab National Bank, Indian Bank and the Union Bank of India to deposit the amount within 15 days with the Bombay High Court Registry, which would then remit the money to the bank account of BCCI.

The order of the apex court came on a Special Leave Petition filed by the BCCI stemming from the banks’ refusal to pay the money to the tune of Rs 1,600 crore under the conditional bank guarantees issued by them towards the contract executed in consideration of the Media Rights License Agreement (MRLA) between BCCI and Nimbus for broadcasting the cricket matches.

Appearing for BCCI, senior advocate C A Sundaram said the matter pertains to a four-year Media Rights License Agreement entered into by the BCCI with Nimbus Communications Ltd in 2009 for telecast of all domestic and international matches played by India at home between April 1, 2010 and March 31, 2014.

However, BCCI in December 2011 cancelled the domestic broadcasting rights given to Nimbus owing to a default in payment.

The Board had then sought to encash the guarantees, which was refused by the banks.

The BCCI filed suits against the three banks before the Bombay High Court which granted the banks leave to defend the suit on a condition that they deposit Rs 400 crore with the the high court which would then redeposit the sums with the respective banks.

Aggrieved by this order, the BCCI had moved the apex court contending that that there was no point in redepositing the money with the bank.

The BCCI, today, also undertook that if the suit initiated by it fails, the amount of Rs 400 crore would be returned by it along with interest.

(Source:http://news.outlookindia.com)

Court rejects bank’s plea for FIR against customers

Delhi court dismissed a plea lodge as a criminal case by a Punjab National Bank against its two customers for allegedly taking out money from a third customer’s account through an ATM card, wrongly issued to them.

District Judge and Additional Sessions Judge R K Gauba dismissed the PNB plea, made against Metropolitan Magistrate Ankit Singla’s order, which too had dismissed it.

In its complaint, the bank had said Sobha Rani Pattnaik and her husband Sudhanshu Bhushan Pattnaik had opened a current account in its Lado Sarai branch in South Delhi on March 26.

It said the couple approached the bank on March 27 for issuance of ATM card in respect of their current account but the bank wrongly issued them the ATM of another customer M/s Shubhadra Store and “they withdrew Rs 10, 68,077 from the ATM account knowing full well that it did not belong to them as they had only Rs 17,975 in their account.”

The bank thus sought registration of the FIR against them for offences of criminal breach of trust and cheating and under other provisions of the Indian Penal Code.

The magistrate, however, had held that basic requirement for the offence of cheating is that there should be prior inducement with dishonest intention.

The magistrate had said “In the present case from the complaint there is no fact which can be deduced that accused number 1 (Sobha Rani) and 2 (Sudhanshu) induced the complainant in any manner for delivering them the ATM card of another customer.”

The magistrate had held that though there was “prima facie misappropriation” by the couple, “the essential element (for the offence of criminal breach of trust) of entrusting property was missing as the bank inadvertently gave the ATM card of another customer to proposed accused.”

The sessions court upheld the magistrate’s order saying, “the magistrate has declined the prayer for directions to the police to investigate the matter for the reasons that entire evidence is within the reach of the complainant and no custodial interrogation or field investigation is necessary.”

The bank has, however, been allowed to lead evidence in support of its complaint under section 200 (examination of complainant) of the CrPC.