India: Three arrests in $1.8 billion state-run bank scam
February 17, 2018
India's Central Bureau of Investigation (CBI) has made first arrests in the state-run Punjab National Bank scam that allegedly involved billionaire jeweler Nirav Modi obtaining fake documents for overseas loans.
Among those arrested were two employees at Punjab National Bank believed to be at the center of a staggering $1.77 billion (€1.43 billion) fraud.
The two — Gokulnath Shetty and Manoj Kharat — are suspected of steering fraudulent loans to companies linked to Modi and to entities tied to jewelry retailer Gitanjali, which is led by Modi's uncle, Mehul Choksi.
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The third person arrested was Hemant Bhat, described as the "authorized signatory" of the companies tied to Modi, accused of embezzling about $44 million from the bank.
A Mumbai court ordered all three suspects to remain in police custody until March 3, as the federal investigators probe the fraud — the country's biggest-ever bank scam — that has raised serious questions about India's banking system.
PNB, the second-largest state-run bank in India, took to Twitter to calm the nerves of its customers.
Modi's whereabouts unknown
The whereabouts of Modi, whose high-end jewelry has been worn by Hollywood stars including Kate Winslet and Naomi Watts, is unknown.
Indian broadcaster NDTV reported on Friday that Modi was staying at an apartment in New York's Manhattan.
The broadcaster said Modi, his wife, brother and uncle, Mehul Choksi, had left India before the scandal was discovered. Modi was recently seen in a group photo with Indian Prime Minister Narendra Modi taken during the World Economic Forum in Davos. Nirav Modi is not related to the Indian prime minister.
India on Friday suspended the passports of Modi and Choksi. Modi's brother and wife are not Indian nationals.
Modi is on India's richest 100 list with a total worth of $1.73 billion, according to Forbes.
Indian authorities have seized over $870 million worth of diamonds, jewelry and gold in raids on showrooms and offices linked to firms run by Modi and his uncle, NDTV reported.
India's Income Tax Department has also seized 29 properties and 105 bank accounts of Modi and his group companies, Reuters reported, citing a spokeswoman.
Modi is the latest Indian businessman to have left the country to escape facing charges of financial crimes, prompting opposition parties to question Prime Minister Modi's fight against corruption.
Embattled liquor baron Vijay Mallya fled India in 2016 just as the enforcement agencies were closing in on him to recover the $1.3 billion he was reported to have owed Indian banks.
ap/jm (Reuters, AFP)