Nirav Modi company wasn’t registered: CBI

Mumbai: The Central Bureau of Investigation’s (CBI) probe into the Punjab National Bank (PNB) fraud case against absconding accused diamond businessman Nirav Modi allegedly found that Solar Exports, one of the three firms promoted by him that are accused in the case, was not registered with Mumbai’s registrar of firms. Despite this, the three firms got sanctioned 150 letters of undertakings (LoU) from the bank’s Mumbai branch in an allegedly fraudulent manner in 2017.

The three firms were issued LoUs worth Rs 6,498 crore. Among the three firms, Solar Exports was sanctioned LoUs worth Rs 2,152 crore by the bank, said a CBI source. LoUs are required to raise buyer’s credit from overseas banks. Apart from Solar Exports, the two other partnership firms of Modi that are accused in the case are Diamond R US and Stellar Diamonds, said sources. Diamond R US and Stellar Diamonds were registered with the Mumbai registrar of firms.

The LoUs were issued despite the firms’ alleged ineligibility. According to the CBI, the LoUs were given to the firms allegedly without any conduct of due-diligence and in collusion with the accused firms. “The three accused firms had not been sanctioned the facility to get LoUs issued. Besides, the LoUs were issued to them without them providing the 100 per cent cash margin against the LOUs, which is a requirement in cases where the customer does not have the sanctioned facility to seek LOUs,” said a CBI source.       

The CBI began its probe into the fraud after registering a case in January on receipt of a complaint from the PNB. The bank allegedly first got wind of the fraud after the representatives of the three accused firms had approached it for the issuance of LOUs on January 16.

The LOUs were, however, denied to them as it was found that they did not have the sanction to get LOUs issued, said the source. Later, an exhaustive probe was ordered to verify the background of the firms by the bank. It was during the verifications when the bank found that the firms were issured 150 LOUs allegedly fraudulently with the collusion of a few officials who have been recently chargesheeted in the case by the agency.