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How Mehul Choksi became one of India's most wanted fugitives

Understanding Mehul Choksi's brush with the legal system and about his alleged involvement in one of India's biggest financial scandals.

How Mehul Choksi became one of India's most wanted fugitives-VPN
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New Delhi, First Published May 27, 2021, 3:25 PM IST

In a dramatic turn of events, fugitive Indian diamond merchant Mehul Choksi was arrested in Dominica, where he was nabbed by authorities on the basis of an Interpol red corner notice against him ever since he disappeared from Antigua.

Mehul Choksi, one of the prime accused of the $1.8 billion Punjab National Bank loan fraud case, was arrested when he was trying to flee to Cuba. His disappearance from Antigua came at a time when India was trying its best to extradite him, and he was facing an extradition case in the courts of Antigua based on a request made by India.

Now, the Antiguan government has requested the Dominica government to directly transfer Choksi to India. Dominica has also agreed to the same. If Antiguan Prime Minister Gaston Browne is to be believed, Choksi should be back in India in the next 48 hours to face trial. 

Let us deep dive to understand more about Mehul Choksi and how is he related to the PNB fraud case.

Mehul Choksi and his connection with Nirav Modi

Mehul Choksi is the man behind the erstwhile famous jewellery brand Gitanjali Gems. He had taken over from his father Chirubhai Choksi in 1985. He had a number of brands in his portfolio, including Gili, Nakshatra, Asmi, D'damas, Maya, Sangini, etc. 

He is also the maternal uncle of Nirav Modi, the co-accused in the PNB fraud case. He was also a partner to Modi's three companies which came under the radar of the investigating agencies. Earlier, The Securities and Exchange Board of India were analysing the stock and trade details of his company Gitanjali Gems for multiple cases, including brokerage default. SEBI found multiple violations, including noticeable delay in company board meeting without adequate reasons.

The PNB fraud and how it came to light:

In January 2018, the Punjab National Bank filed an FIR against three companies (M/s Diamond R US, M/s Solar Exports and M/s Stellar Diamonds) and four people (Nirav Modi, his wife Ami Modi, brother Nishal Modi and uncle Mehul Choksi) -- all partners of the firms. The FIR accused them of defrauding PNB to the tune of 2.8 billion rupees (which was later revised to 113.94 billion rupees).

For seven years before the scam came to light, two employees of PNB were issuing unauthorised Letters of Undertaking (LOU) for FireStar (a company owned by Nirav Modi). An LOU is an instrument through which the importers carry out their business. 

Usually, LOUs are issued by banks after businesses submit securities worth the amount of LOUs issued. However, in this case, there were no collaterals issued. So when one of the two employees retired and a new employee joined, he asked for collateral to be provided. The representatives from Firestar responded, saying that no guarantees were ever asked from them. This triggered suspicion, and further investigation unearthed the scam.

Why was Choksi named in the FIR?

As per reports, Mehul Choksi was a partner in all the three firms named in the charge sheet. However, Gitanjali Gems claimed that he had retired as a partner in 1999. 

On March 6, 2018, CBI had detained Vipul Chitalia, the vice-president of Gitanjali Group of Companies and a close aide to Choksi. In 2018, Enforcement Directorate had also attached 41 properties worth Rs 1210 crore linked to Choksi and his companies as money laundering assets and had ordered for the attachment to continue. In February this year, ED attached 14 crores worth of properties of Mehul Choksi and the Gitanjali group. 

How did Choksi secure Antiguan citizenship?

Choksi had received his Antiguan citizenship in November 2017. In his statement to Antigua, he said that he wanted to expand his business in the Caribbean Islands and that he was seeking citizenship to get visa-free travel to 130 countries. 

At present, people with Antiguan passport can travel up to 165 countries without a visa. Choksi escaped to Antigua in January 2018, days before the scam came to light.

He claimed that he left for medical treatment and will return only when he is fit. In 2019 as well he refused to return to India as he was medically unfit to travel, but he never produced any document to the court. 

In 2018, in a statement, the Citizenship by Investment Unit (CIU) of Antigua and Barbuda that Choksi had received citizenship through the investment route. His application was subjected to scrutiny, but since it was in 2017, no derogatory information was found.

Antigua is considered one of the many tax havens in the Caribbean. Antigua had cancelled his citizenship last year, and Choksi was fighting this decision in an Antiguan Civil Court.

His dramatic arrest in Dominica

Choksi was arrested last night by Dominica. He was seen disposing of some documents in the sea on the Canefield beach in Roseau, the capital of Dominica, which raised suspicion. He refused to answer the questions of the police. 

Upon further questioning, it was revealed that he had entered Dominica on a boat, and his final destination was Cuba. 

India does not have any extradition agreements with Cuba. 

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