Nirav Modi was selling four grades of jewellery, across the globe, according to the chargesheet filed against him and others in the Rs 14,000 crore PNB fraud case. The best quality of diamonds was sold only in Nirav Modi showrooms and the worst (low-end) quality diamonds were exported to Hong Kong and Dubai, which again, were re-exported back to India.
The Directorate of Revenue Intelligence (DRI), an apex anti-smuggling agency in India expertise in combating commercial frauds related to international trade and evasion of customs duty, is once again examining all these crucial findings in 14,000 pages of Prosecution Complaint filed by the Enforcement Directorate (ED) against Nirav Modi and others.
"After the examination of these documents and evidences, DRI is likely to register a fresh case against Nirav Modi under Customs Act," a senior DRI official told Indiatoday.in. It is imperative to state that DRI was the first investigative agency to raise an alarm against Nirav Modi and his fraudulent activities.
In 2014, DRI had booked its first case of mis-declaration of consignments of "diamond studded gold jewellery" being exported in the names of Firestar Diamond International Pvt Ltd and Firestar International Pvt Ltd, both a special economic zone (SEZ) units located in Surat.
The DRI had established the modus operandi of using poor quality diamonds/pearls in export of jewellery and rotation of the same at highly overvalued price. The consignments was highly over-valued, in fact, during the valuation process, the government-approved valuer declared that those diamonds "studded" on the gold bangles being exported were known as "dead diamonds".
Later, in March 2018, the DRI lodged its second case against Nirav Modi and his firms for allegedly diverting diamonds and pearls worth Rs 890 crore to domestic markets through units located in the Surat SEZ.
Nirav Modi's shady diamond business
Anup Panchal, COO, Firestar Group - who was looking after manufacturing and production of jewellery business in Firestar Group in his statement to ED officials said that there were four quality of jewellery - first, for Nirav Modi branch which was high-end jewellery; second, for A Jaffe Jewellery which was low-high end; third, for US Retailers like Zales, Sterling, Costco were mid-end or low-end; and the fourth, normal jewellery for exports to Hong Kong and Dubai.
"For Hong Kong and Dubai business, Modi used to get diamonds from the customers only. The jewellery exported to Dubai and Hong Kong never used to return as defective or sub-standard as otherwise with the case of other exports. The orders from Hong Kong and Dubai were never in perfect form like sometimes order was given orally over phone and details would vary etc," Panchal stated.
To nail it down, Samir Changani, Femstone & Diamond Quality Control Manager of Firestar International Ltd, told ED that once all Dubai-based dummy companies receives import shipments, the dummy directors including him and Bhavik Shah, Nilesh Khetani, Ashish Bagaria and others "shifted some packets of diamonds and pearls from one box to another for further export".
"There was no value addition work to the diamond and pearls. Stones were dismounted from the jewellery and the gold part was melted. The stones were again exported to Dubai and India. That melted jewellery used to come in the form of bars and were again exported to Dubai," Changani stated, explaining the process of jewellery dismounting, metal melting and export of the same. Though Changani was working for Firestar International Ltd, but he was getting salary from Brilliant Diamonds Ltd.
Another employee, Kumaraswamy, junior officer of Solar Exports, Stellar Diamond and Diamond R US confessed before the agency that all three companies were importing silver grains and pearls from same Hong Kong and Dubai based companies and used to export pearl necklaces and pearl bracelets to the companies based in Hong Kong Dubai.
He stated, "Every export used to connected with corresponding import consignment and value addition of 3.5 - 3.7 per cent were added. From 2016-17, the pearl necklaces/bracelets were exported to the same party from which pearls were imported".
In another crucial statement of Dharmesh Bothra, owner of Jain Diamonds Pvt Ltd and Spark-E-Lina, it was revealed that his companies were used for layering and rotating sales/purchases of Gitanjali and Firestar group companies. These fraudulent transactions were carried out only to inflate the turnover and for that he was promised 0.15 per cent of the turnover.
According to Bothra, Modi used individual names such as his relatives or employee's names for showing retail sales of jewellery. Starting from arrangement of jewellery and diamond, CHA, shipment of export consignment, receipt of export proceeds etc., was handled by Nirav Modi himself, and Bothra was only to prepare the export documents as per the instructions and make payment to the CHA.
Uneducated dummy directors
Eighty per cent of the overseas companies in Hong Kong and Dubai, which have business dealings with Firestar group are directly or indirectly owned by Nirav Modi and he enjoys full control over these companies through namesake directors.
During the course of investigation, it was revealed that Diamonds R US, Solar Exports and Stellar Diamond are the partnership firms having partners. During questioning, all six partners confessed that they had signed the papers presented to them or a nominal amount of Rs 8,000 per month and they did not know anything about the operation and activity of these three entities.
"It was evident that Nirav Modi did not inform the banks intentionally about change in the partnership/ownership of these firms in order to shield himself and his aides and to camouflage the misdeeds. The whole brain behind these dealings is of Nirav Modi, who devised the said modus operandi of committing fraud so as to obtain maximum benefits out of the dealing banks," the chargesheet said.
Evidently, statements of Manojbhal Sankhat, partner of Stellar Diamond; Laljibhai Kalsaria, partner of Diamond R US and few others, recorded by the ED revealed that not only these dummy partners were getting Rs 8,000 per month, but they were uneducated, as well. "They cannot read or write English and the documents created by Modi used to be in English. They were partner only on papers," the chargesheet said.
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