Billionaire jeweller denies involvement in huge Indian bank fraud

This article is more than 12 months old

NEW DELHI/MUMBAI: Indian billionaire jeweller Nirav Modi, one of the accused in the country's largest ever bank fraud, denies allegations levelled against him by Punjab National Bank (PNB), his lawyer said on Tuesday.

"There is nothing, there is nothing in it," Mr Vijay Aggarwal, a lawyer representing Mr Modi, told Reuters.

He was referring to the police complaint filed by PNB that alleges that companies linked to Modi and one of his relatives received credit worth nearly US$1.8 billion (S$2.4 billion) between 2011 and 2017 using false guarantees supplied by two bank officials.

Mr Aggarwal, speaking by telephone, declined to comment on where Modi was. Indian officials are on the lookout for him and his family, who police say left India in January prior to the case being filed.

"Everything is documented," Mr Aggarwal said of Mr Modi's dealings with PNB, adding that the state-owned bank had regularly levied fees on its dealings with the jeweller's firms.

Asked about his legal strategy, Mr Aggarwal said: "(While) there is no charge sheet, there is no strategy. When there is a charge sheet, there will be a strategy."

According to a police complaint by PNB, the two officials at a Mumbai branch of the bank steered fraudulent loans to companies linked to Mr Modi and entities tied to jewellery retailer Gitanjali Gems, which is led by Mr Modi's uncle, Mr Mehul Choksi.

"They are covering themselves up," Mr Aggarwal said of the complaint.

"They want to avoid liability... that is why they are cooking up this story."

Mr Choksi, who has also left the country, has not commented. Gitanjali, in a stock exchange filing, has denied Mr Choksi's involvement in the alleged fraud.

Five bank officials, including the two at the Mumbai branch, have been arrested.

The fraud case has stunned financial markets and it sent PNB shares tumbling for a fifth straight trading day yesterday.

Shares in PNB, which has shed nearly a third of its market value since disclosing the fraud, were down 3.5 per cent in early trading after rating agency Fitch placed the bank on negative watch. Later, Moody's also placed the bank's ratings under review for a downgrade.

Separately, in a letter to PNB officials, Mr Modi stated that his companies owe the bank under 50 billion rupees (S$1 billion), much lower than the amount alleged by the bank.

He also said PNB has jeopardised its chances of recovering the sums owed by going public with its allegations. - REUTERS