Until the PNB fraud involving diamond merchant Nirav Modi was unearthed in February, the Winsome Diamond Group scam was country's second largest banking fraud after Kingfisher Airlines. Though investigation agencies were able to seize properties worth over Rs 6,000 crore in the Nirav Modi scam, they failed to make any big headway in the Winsome Diamond case. But now, the CBI has filed a chargesheet in the Special CBI Court of Mumbai against two former chairman-cum-managing directors and a former executive director of the Canara Bank in connection with the Rs 146-crore loan default case. PTI reported that the agency has also sought a 'Red Corner Notice' against company promoter Jatin Mehta. The billionaire jeweller, who has reportedly got a St Kitts passport, is also one of the biggest corporate defaulters in India.
The Winsome Diamond Group had taken a loan of Rs 6,800 crore from a consortium of banks led by the Standard Chartered Bank. Unfortunately like the recent PNB fraud, in this case too, the PNB had the highest exposure of Rs 1,800 crore. The chargesheet has been filed against total 21 accused, including Mehta and his wife, his company and 15 public servants who include former executive director of the bank Archana Bhargava, and CMDs Avinash Chander Mahajan and Sunder Rajan Raman, CBI Spokesperson Abhishek Dayal said.
Similar to the Letter of Undertaking (LoUs) issued for Nirav Modi's company, which helped him raise thousands of crores from overseas banks, the consortium of banks had issued standby Letters of Credit (LoC) in favour of international bullion banks to supply gold to Winsome Group companies. The LoCs ensured that the Indian banks would pay for these international bullion banks if Winsome Group failed to pay back to them.
In 2013, the Winsome Diamond Group said it can't pay back to the bullion banks as its 13 customers in the UAE had defaulted on payments due to losses of over $1billion in derivatives and commodities trading. So far, the India banks have not been able to do much in the case -- except declaring the group a defaulter -- as the Winsome Group won the case in the Gulf, citing the losses of around Rs 6,500 crore at the hands of the UAE-based firms.