The Nirav Modi Scam!

Who is Nirav Modi?

? Nirav Modi is an Indian entrepreneur and premium diamond jeweler who was placed 57 on Forbes' 2017 list of billionaires with an estimated net worth of US$1.8 billion. He also established the Nirav Modi diamond jewelry retail business.

? Nirav Modi is the Chairperson of Firestar International company, the parent association of the Nirav Modi retail business, which has branches throughout the world.

? He has 16 different branches around the world, including Delhi, Mumbai, New York's Madison Avenue, Hong Kong, London, Kuala Lumpur, and Macau in China.

? The Indian government and Interpol have both been accused of conspiracy, theft, money laundering, deceit, and contractual misappropriation in relation to Nirav Modi's scam since 2018.

? When this issue is brought up, one of the biggest banking players always comes to mind: Punjab National Bank. The mastermind, Nirav Modi is also being investigated in the $2 billion Punjab National Bank corruption scandal. He was also arrested in California (USA) for scamming Paul Alfonso, a businessman from Los Angeles, over two custom-designed diamond rings that proved to be fake diamonds.

? After Nirav Modi declared bankruptcy in New York in March 2018, In June 2018, he claimed to be in the United Kingdom after three months, where he had sought political asylum. Swiss prosecutors seized a grand total of $6 million in Nirav Modi's both Swiss bank accounts, as well as his personal wealth, in June 2019.

What exactly is the story behind the Nirav Modi Scam?

The announcement that India's Punjab National Bank (PNB), the country's second-largest public bank, had discovered deceptive and illegal transactions totaling $1.77 billion (over Rs11,400 crore) at a single department in Mumbai shocked the whole country.

Amid the country's tight budgets at the time, the government provided PSU banks Rs 88,000 crore as part of a $32 billion bank capital raising program. The Indian banking sector also faced increased capital requirements by next year to comply with revised global banking rules known as Basel III.

The Nirav Modi Scam sparked a huge controversy-how did it come to light?

? A PNB authority in Mumbai filed charges with India's federal investigative agency on January 29, 2018, the accusation alleging that three firms and four people, including billionaire jewelry designer Nirav Modi and his uncle Mehul Choksi, who is the managing director of Gitanjali Gems Ltd, cheated the bank and triggered a massive deprivation of Rs 280 crores ($43.8 million).

? The bank stated that two junior staff at the Punjab National Bank Mumbai branch assisted and helped companies and their managers in obtaining "letters of undertaking" (LoUs) from the bank without having an approved credit limit or retaining cash "on balance."

? The LoUs were allegedly utilized by Modi and Choksi to seek short-term credit from foreign offices of other Indian banks, as per Punjab National Bank. The LoUs were signed on behalf of Indian bank branches for the acquisition of diamonds for a year, with the Reserve Bank of India allowing a complete timeframe of ninety days from the date of dispatch.

? This rule was disregarded by Indian banks' foreign offices. They failed to share any documents or information with PNB that were provided to them by the firms when they applied for loans.

? On March 10, 2011, Nirav Modi received his first false assurance from PNB, and over the next 74 months, he received 1,212 more.

? The Enforcement Directorate (ED) discovered bank code devices used by the runaway diamond trader to transfer illegal cash to international sham firms. The investigation of Nirav Modi's scam concluded that Nehal Modi, Nirav Modi's brother, trashed the equipment and even protected a server in the United Arab Emirates (UAE) shortly after the fraud was discovered.

? These fictitious companies were headquartered in the British Virgin Islands and other offshore accounts were getting illegal PNB LoUs.

How PNB Missed One of the Biggest Corporate Scams?

? Nirav and his firms are under scrutiny for using those LoUs in Hong Kong to acquire buyer credit from Indian Bank (formerly Allahabad Bank), Union Bank, Axis Bank, Bank of India, and State Bank of India local branches. The accused bank officials filed the letters of intent and notified these branches using SWIFT, an international cash transaction facility. All international banks are linked through the program.

? The accused bank officials were aware that PNB's SWIFT network was not linked to the bank's main financial system. These transactions were not recorded in the bank's own database.

? Three diamond enterprises asked PNB authorities for a bank credit to import raw stones from foreign, and the Nirav Modi scam was discovered. When the three enterprises contacted PNB for bank loans through LoUs in January 2018, the bank's executive in charge requested a guaranteed cash buffer because the firms had no pre-approved limit.

? Employees of PNB exploited the SWIFT network by messaging about fund requirements to Allahabad Bank and Axis Bank and other banks. All of this was done with SWIFT passwords. This leaves the PNB administration in the dark for years, unfortunately.

What's the Scenario of the Nirav Modi Scam Case?

? A special court has issued a public notice to runaway diamond trader Nirav Modi, who is wanted in India for alleged theft and money laundering in the Punjab National Bank scam, questioning why his assets should not be seized under the Fugitive Economic Offenders (FEO) Act.

? Nirav Modi has also been summoned to appear by Special Judge V C Barde on June 11. If the culprit fails to appear, the court will take action under the FEO Act.

? At the request of the Enforcement Directorate (ED), which is investigating the case, a special court labeled Nirav Modi a runaway financial culprit in December 2019.

? Nirav Modi's wife Ami Modi, has been served a Red Corner Notice, or a global arrest warrant, by Interpol. The summons is concerning money laundering accusations filed against her in India.

? Nirav Modi's wife was listed in a newly issued charge-sheet issued by the Enforcement Directorate in February of last year. This charge sheet was filed for illegally benefiting from the $30 million acquisition of two residences in New York City.

? The residences were part of Nirav Modi's 637 crores in overseas assets confiscated in October, which included a 56.97 crore apartment in London.

? In Nirav Modi Scam, his brother Nehal, and his sister Purvi have all been issued Red Corner Notices.

? Nirav Modi was jailed in London last year and is now detained at Wandsworth Prison, where he is resisting deportation to India. After hearing via video link in a regular remand session before a UK court earlier this month, he was sent to custody until August 27.

Final Remarks

The Nirav Modi news has demonstrated that having the excessive ambition to succeed by any means possible can have disastrous effects on one's life. Sadly, the Nirav Modi scam had a significant impact on Indian banks and the country's economy, which is considered to be one of the largest scams in history.