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Transcript

NIRAV MODI

Punjab National Bank scam...

CLASS : BBA-5

present by:

Dhruv Radadiya,

Dhruvang Gohel,

Mayur Aparnathi

INTRODUCTION

Who is Nirav Modi?

Nirav Modi was born in Gujarat, but grew up in Antwerp, Belgium. He is a businessman and the founder of Nirav Modi Global Diamond House, established in 2010.

His family has been in the diamond business for several generations.

Nirav Modi was the first Indian jeweller to have been featured on the covers of Christie's and Sotheby's catalogues.

His brand, Nirav Modi, had Priyanka Chopra, Kate Winslet and a Victoria Secret model, as its brand ambassadors.

He is ranked 1,234 in Forbes’s world’s billionaires list for 2017, and 85 in India. His net worth is estimated at $1.73 billion according to the Forbes

ACHIEVEMENTS OF NIRAV MODI...

1. The Golconda Lotus Necklace, featuring a rare 12.29 carat Golconda diamond, pink diamonds and Ainra brand cut diamonds, sold at Christie’s Hong Kong auction in November 2010.

2. The Riviere of Perfection, featuring 36 flawless white diamonds weighing a total of 88.88 carats, was sold at Sotheby’s Hong Kong auction in 2012.

3.In 2013, Mr. Nirav Modi was featured on the Forbes list of Indian billionaires and has been featured on the list ever since.

How did he start Diamond Business?

At the age of 19-20 ,he returned India and started working with his maternal uncle Mehul Choksi

  • Mehul Choksi is the founder of Geetanjali group of Companies
  • Later in 1999,Nirav Modi started Finestar

Diamond Company and later he launched brand Nirav Modi

Mehul Choksi

Nirav Modi

THE FRAUD

ALL YOU NEED TO KNOW ABOUT

THE PNB FRAUD...

LET'S BEGIN.

1

On Valentine’s Day, the PNB informed the Bombay Stock Exchange that it had detected “fraudulent and unauthorised transactions” amounting to Rs 11,400 crore at its Brady House branch in Mumbai. The share price of the country’s second-largest public sector bank immediately plunged 9.81%, dragging down shares of other public banks as well. Over the following week, PNB’s shares fell 28%.

The “fraudulent transactions” involved PNB officials handing out Letters of Undertaking to companies associated with Nirav Modi, allowing him to access massive foreign exchange loans that were completely unsecured.

2

Letter of Undertaking

Letter of Undertaking (LOU) is a provision of bank guarantee, under which a bank allows its customer to raise money from another Indian bank's foreign branch in the form of a short term credit. The LOU serves the purpose of a bank guarantee.

How did it happen?

The Instruments Manipulated by Nirav Modi.

SWIFT: The Society for Worldwide Interbank Financial Telecommunication provides a network that enables financial institutions worldwide to send and receive information about financial transactions in a secure, standardized and reliable environment.

CBS: is a back-end system that processes daily banking transactions, posts updates to accounts and other financial records. It is a centralised software that keeps all records across branches and is capable of generating alerts over any undue activity.

HOW DID IT HAPPEN?

None of the transactions were routed through the CBS system, thus avoiding early detection of fraudulent activity. The bank also cautioned of a similar modus operandi used by the same branch official in companies belonging to Gitanjali Gems Ltd, promoted by Mehul Choksi viz. Gitanjali Gems, Gili India and Nakshatra while issuing LOUs."In case of LoUs, it has been found that at the time of issuing LoUs for a smaller amount by SWIFT, the transaction was routed through the CBS system but subsequently, amendments were made in these LoUs by substantially enhancing the amount of LoUs and transmitted through SWIFT without routing these enhancements through CBS.

LOUs were opened in favour of overseas branches of Indian banks for import of pearls for a period of one year, for which as per RBI guidelines, the total time period allowed is 90 days from the date of shipment. Union Bank of India, Allahabad Bank and Axis Bank are said to have offered credit based on letters of undertaking (LOUs) issued by PNB.

Among those named is a deputy manager, Gokulnath Shetty, who was posted at PNBs foreign exchange department in Mumbai since March 31, 2010. He had allegedly along with another official Manoj Kharat fraudulently issued LoUs to these firms without following prescribed procedure or making entries in the banking system, avoiding detection of transactions.

Statements

Actions taken by the Government.

On January 28, the PNB had complained to the CBI about the fraud. The agency, in turn, approached Interpol to issue a notice for locating Nirav Modi, his wife Ami, brother Nishal and uncle Mehul Choksi, all of whom had left India early in January. Soon after, the Indian government suspended the passports of Nirav Modi and Choksi.

The CBI has booked Nirav Modi for fraud and arrested five officials of companies associated with him and Choksi – Vipul Ambani and Arjun Patil of Firestar International, Kapil Khandelwal of Nakshatra Group, Niten Shahi of Gitanjali Gems, and Kavita Mankikar, the authorised signatory of three companies accused of fraud.It has also arrested three PNB officials – Gokulnath Shetty, a deputy manager at Brady House branch, Manoj Kharat, who operated the SWIFT financial messaging system, and Rakesh Jindal, head of the bank’s Brady House branch from 2009 to 2011 and currently general manager of credit at the bank’s head office in Delhi.

They had issued Letters of Undertaking without getting proper approvals and without making entries in the core banking system.

The Enforcement Directorate had issued fresh summons to both Nirav Modi and Choksi, asking them to appear before it on February 26. Nirav Modi refused to do so.

Actions taken by PNB

PNB accused Nirav Modi of laundering money. “You were getting LoUs issued illegally and in an unauthorised way through few bank officials,” The Economic Times quoted the bank as having written. “At no stage such facilities were extended by our bank to the three partner firms."

It also asked Nirav Modi to come up with a plan to return the money. “Your commitment and undertaking for sparing of the total liability was not backed by providing upfront amounts and timelines,” the bank said in its letter, NDTV reported, quoting PTI. “However, should you have any concrete and implementable plan, do revert.”

Separately, in a clarification to stock exchanges, the bank claimed it had “followed all lawful avenues available to us as per law of land to recover our dues”.

The bank has now appointed the auditor Pricewaterhouse Coopers to investigate the alleged fraud, The Economic Times reported, asking it to collect evidence against Nirav Modi and quantify the bank’s losses from the alleged fraud.

Where is

he now?

Where is he now?

Nirav Modi, along with his family, skipped the country and moved to various foreign destinations just 10-15 days after the lodging of the FIR.

According to his lawyer, he was out for "Business Purposes"

Now

what?

What now?

In the PNB case, the entire liability is on the bank, which will get the money from our government. When a government refunds a bank, it uses the taxpayer's money.

So long story short, our money is at risk in the banks, it's safe at home, we can't buy cryptocurriences with it, which means the best possible option is...jewellery.

Well played Nirav.

More Investigation

TIMELINE...

1.

HIS FAMILY MEMBERS INVOLVED IN THE SCAM

Family members involved

MEHUL CHOKSI(UNCLE)

NNIRAV MODI

NISHAL MODI(BROTHER)

AMI MODI (WIFE)

2.

CBI & ED

CBI BOOKED:

1) NIRAV MODI , MEHUL CHOKSI .

2) VIPUL AMBANI AND ARJUN PATIL (FIRESTAR INTERNATIONAL)

3) KAPIL KHANDELWAL ( NAKSHATRA JWELLERS)

4)NITEN SHAHI (GITANJALI GEMS )

& KAVITA MANKIKAR ( THE AUTHORISED SIGNATORY IF THREE COMPANIES ACCUSED OF FRAUD

GOKUL NATH SHETTY ( DEPUTY MANAGER PNB , BRADY HOUSE MUMBAI)

MANOJ KHARAT WHO OPERATED SWIFT SYSTEM WERE ALSO ARRESTED BY CBI.

CBI & ED INVESTIGATION

The Enforcement Directorate issued summons to both Modi and Choksi to appear before it on Feb 26, 2018 .

Modi refused to do so.

He fled the country with his family

3.

ASSETS SEIZED

CBI searched Nirav Modi's home, showrooms and offices in Mumbai, Delhi and Surat. The Enforcement Directorate (ED) seizes diamonds, jewellery and gold worth Rs. 5,100 crore.

What happened later?

In the PNB case, the entire liability was on the bank, which got the money from our government. When a government refunds a bank, it uses the taxpayer's money.

So long story short, our money is at risk in the banks, it's safe at home, we can't buy cryptocurriences with it(our government is planning to ban it) which means the best possible option is...jewellery.

Well played Nirav.

Thank You

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