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Nirav Modi claims his brother, wife 'wrongly named' in PNB FIR, urges bank to be 'fair'

Nirav Modi claims his brother, wife 'wrongly named' in PNB FIR, urges bank to be 'fair'

Contrary to what Nirav Modi claims in the letter, the total fraud value might be higher than the Rs 11,400 stated by the PNB.

Diamantaire Nirav Modi (Photo: Rachit Goswami) Diamantaire Nirav Modi (Photo: Rachit Goswami)

Breaking his silence on the biggest banking fraud at the government-owned Punjab National Bank, celebrity jeweller has reportedly written a letter to PNB, saying the erroneous liability which resulted in a media frenzy has jeopardised his ability to repay the dues of the group to the banks.  

In a letter to the management of the defrauded Punjab National Bank purportedly penned by the billionaire jewellery designer, Modi has requested the bank to permit payment of salaries to 2,200 employees from the balance lying in the current accounts. "I would request you to permit salaries for FIPL (Firestar International Private Ltd) and FDIPL (Firestar Diamond International Private Ltd) to be paid for the 2,200 employees from the balance lying in the current accounts. Our HR head will send you a breakup of the monthly salary," Modi reportedly added in the letter.

Modi accused the bank of jumping the gun. "Even after your complaint was filed, in good faith I wrote to you saying please allow me to sell Firestar Group, or their valuable assets, and recover the dues not just from Firestar Group, but also from the three firms," he wrote. Valuing his domestic business at around Rs 6,500 crore, he said "this could have helped reduce/discharge the debt to the banking system," but quickly added that this is not possible as all his bank accounts have been frozen and assets have been sealed or seized. "In the anxiety to recover your dues immediately, despite my offer, your actions have destroyed my brand and the business and have now restricted your ability to recover all the dues leaving a trail of unpaid debts."

To remind you, last week PNB's managing director Sunil Mehta had mentioned that Modi had written to them promising to repay the money by selling his company Firestar Diamonds but had made it clear that the offer was "vague". According to Mehta, neither was there "any concrete plan to repay so far", nor had Modi come to the bank "personally" to discuss the matter. "We have requested to him to come and give us a written plan and how he is going to make a repayment", he added.

That's highly unlikely given that the diamantaire-turned-con artist extraordinaire left the country along with his family in the first week of January-much before the scam broke. In fact, last year itself Modi changed his status to Non Resident Indian (NRI). Here's proof: His company Firestar International - which he was trying to take public to raise more funds - had classified him as NRI in financial year 2016-17 while the filing for 2015-16 put him as a promoter 'Resident in India'. Similarly, a certified copy of the resolution by the shareholders of ANM Enterprises Pvt Ltd, another company owned by Modi, clearly mentions him as NRI with an address in Dubai, UAE. This begs the question of why he has given a Dubai address. It certainly seems like he was following a clearly laid out plan of taking up a new citizenship elsewhere and never returning to India to repay the banks.

The letter further claims that the amount owed by his companies is "substantially less", under Rs 5,000 crore. "The erroneously cited liability resulted in a media frenzy which led to immediate search and seizure of operations and which, in turn, resulted in Firestar International and Firestar Diamond International effectively ceasing to be going-concerns. This thereby jeopardised our ability to discharge the dues of the group to the banks," he alleges.

Contrary to what Modi claims in the letter, the total fraud value might be higher than the Rs 11,400 cited by PNB. Primary investigation by CBI and Enforcement Directorate to find out the actual amount lost by banks in the alleged fraud is still ongoing. Investigation reveals that Modi and Mehul Choksi took LoUs further to fund the LOUs he had taken since 2011. As of now the case has been registered against the LoUs taken in 2017, numbering around 151, of which the last one was issued on May 2 last year. The total LOUs amounts to Rs 3,312 crores in 2017.

Interestingly, Modi's letter claims that PNB had time and again acknowledged that "the buyers credit facility has been extended by it to the three partnership firms since several years; that there has been no default on the part of any of these firms over all these years; that money has gone through PNB over all these years for the repayments of the advances given by the overseas bank branches under the buyers credit. He also states that PNB has, over the years, been earning bank charges to the tune of crores of rupees in the bargain and that PNB has extended the money to the firm's buyers as well, receiving full payments, with interest and on time, all these years.

Referring to the valuables worth Rs 5,649 crore that raids by the CBI and Enforcement Directorate yielded, he said "these, and other assets of the group and the three firms could have settled all the amounts due to banks. However, now that stage appears to have passed." He furthermore claims that the bank has wrongly named his brother and wife, who are not connected with any business operations. "My uncle is also wrongly named in this complaint since he has an independent and unconnected business and none of them are aware or concerned with my dealings with your bank," he added. But, according to media reports, CBI has said that PNB's complaint to it claims that Mehul Choksi and his companies caused a loss of Rs 4,886 crore to the bank.

Modi concluded his letter by requesting the bank to "be fair, and support my efforts to make good all the amounts that are found due by my group to all banks...Whatever may be the consequences I may face for my actions, the haste was, in my humble submission, unwarranted."

One could argue that, if all the above is true, his hasty flight from the country, too, was unwarranted.

With PTI inputs