India's Choksi claims innocence in PNB fraud with open
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[February 24, 2018]
By Swati Bhat
MUMBAI (Reuters) - Mehul Choksi, one of two
businessmen allegedly involved in perpetrating India's biggest ever
banking fraud, broke his silence at the weekend with an open letter to
employees claiming his innocence and telling them to look for other
Choksi and his nephew Nirav Modi, both owners of jewelry store chains,
are suspected of colluding with two employees from Punjab National Bank
<PNBK.NS>, the country's second-largest state lender, in an alleged $1.8
The businessmen are said to have been issued with illegal letters of
undertaking (LOUs) from PNB over a seven year period, and to have used
them to get loans from overseas branches of other, mostly Indian banks.
Choksi, who owns Gitanjali Gems <GTGM.NS>, told employees he did not
want anyone to suffer due to an association with him, but that he was in
no position to pay their salaries and they were free to look for other
opportunities until he could prove himself innocent.
"With recent false allegations leveled against me of defrauding the PNB
Bank and media frenzy, the situation has gone grave, which is turning
graver by the day," Choksi wrote in the letter sent to employees on
The scandal, which came to light earlier this month, has shaken
confidence in state-run lenders and turned the spotlight again on
India's deep-seated corruption problem.
At least a dozen people -- six from the bank and six more from Modi's
and Choksi's companies -- have been arrested and the investigation is
Modi, who according to Forbes magazine has a net worth of some $1.8
billion, owns Firestar International and a chain of eponymous boutique
stores from New York to Beijing.
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A bird flies past the logo of Punjab National Bank installed on the
facade of its office in Mumbai, India February 21, 2018.
On Saturday, authorities seized a farmhouse, a solar power plant and land that
belonged to him.
Also on Saturday, India's Enforcement Directorate, which fights financial
crimes, said on Twitter it had taken possession of 21 other properties belonging
to Modi worth 5.24 billion rupees ($81 million) in the latest swoop in Mumbai
and Pune, another city in western India.
Earlier in the week, the agency said it had seized luxury cars worth millions of
rupees belonging to Modi.
A lawyer for Modi has denied his client was involved in any fraud.
Choksi's firm, Gitanjali Gems <GTGM.NS>, has also denied involvement in the
Separately, India's federal police on Thursday registered a case against a
Delhi-based jeweler on a fraud complaint filed by Oriental Bank of Commerce,
another state-owned bank, a police source said.
The lender has alleged the firm, Dwarka Das Seth International, cheated the bank
with the help of some of its officials, using letters of credit (LCs) — a loan
instrument similar to those used by Modi's and Choksi's firms in the alleged
Reuters was unable to reach the Delhi firm as the phone numbers listed online
did not work.
($1 = 64.7000 Indian rupees)
(Reporting by Swati Bhat; Editing by Clelia Oziel)
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