Fly on the wall : The 10-day silence in Rs 11400 crores Scam ?

by Harish Gupta, National Editor, Lokmat Group

The 10-day silence in Rs 11400 crores LoU Scam ?

It is no secret that the diamond business of Mama-Bhanja (Nirav Modi and Mehul Choksi) came crashing on January 16 this year when an executive of Nirav Modi went to the Brandy branch of the PNB to clear the LoU. The cat was out of the bag as the handling deputy manager alerted his seniors of something fishy. All hell broke within hours and the top management got in touch with Nirav Modi who was holidaying in New York. His top executives in India including CFO Ambani kept telling the PNB that monies are being arranged. The shaken PNB management kept negotiated fo full ten days and tried hard to persuade Choksi and Modi to to arrange for collateral and matching securities. Finally, the Managing Director Sunil Mehta told the Banking Secretary in the Finance Ministry who conveyed to Finance secretary Hasmukh Adhia who in turn conveyed the biggest scam under the NDA to the Finance Minister. It transpires that Adhia informed the PMO and Jaitley too briefed the PM on the issue separately. Finally, the PNB decided to lodge a formal CBI complaint on January 28 of cheating relating to Rs 280 crores. The CBI started looking into the matter and three days later, it registered the case on January 31. The second complaint amounting to Rs 11400 crores was reported on February 13.

Value of Nirav Modi properties is Just Rs 800 Cr

The Enforcement Directorate bragged within two days of raids on Nirav Modi's establishments across the country that value of seized assets including flats and properties is Rs 5700 crores. However, the valuers and assessors of properties, jewellery and diamonds are still struggling to assess the actual value of seized assets. An informed source in the ED said the total value of immovable assets of Nirav Modi is around RS 800 crores only. The ED is yet to get hold of the actual ownership documents of all the properties if they had not already mortgaged to banks or otherwise. The ED's legal department is still struggling to discover if the properties are free from any collateral for picking up loans. What surprised industry veterans is that speed with which ED assessed the value of diamonds which is an extremely tedious process. In fact, the whole scam of Nirav Modi was to import rough diamonds and export them or sell them in Indian market at a very high price after cutting and polishing them due to his designing skills and high brand value. So far, the ED had conducted searches at over 200 premises of Modi as well as Gitanjali Gems and seized diamonds, gold and precious stones worth Rs 5700 crores based on the “tag value” or the “book Value” of the diamonds and jewelery. The book value cannot be true estimate of the goods recovered. The tag value is highly inflated. In fact, when the banks sanction loans against imported stock of rough diamonds to jewelers, there is no way to assess the true value because most valuers have no knowledge themselves or they look the other way. This is used for over-invoicing and under invoicing. The Income Tax department had also attached and froze 103 bank accounts and 40 properties of the Modi group of firms, but the value of this attachment has not been given by the IT so far.

Having declared the true value of stocks and properties as Rs 5700 crores, the ED is now in a tight spot. It transpires that the value of diamonds, gold & jewelery is in the range of Rs 1400-1500 crores. One of the reasons for this is that Nirav Modi used to import cheap quality rough diamonds and divert them after value additional in the domestic market at a very high price rather than exporting them.

Nirav Modi’s Hyderabad SEZ scam

The ED  detected that Nirav Modi's Hyderabad-based SEZ was overvalued in the books of Punjab National Bank (PNB)  huge variation in actual inventory and their book value. The difference was as huge as Rs 3,500 crore. The SEZ on an area of 250 acres was sanctioned by the UPA government and inaugurated by then Chief Minister Y.S. Rajasekhara Reddy in 2005 and then it was named as Rajiv Gems Park. In 2014, the name was changed to Gitanjali Gems Park which houses all the five firms owned by Nirav Modi and his associates.  The raids at five gems and jewellery units located at a hardware park at Raviryala village in Maheswaram mandal of Ranga Reddy district, about 30 km from the city. The actual value of 100 odd boxes and containers at the Gitanjali Gems Park, was Rs 300 crore, but the book value in the group’s computers is mentioned around Rs 3,800 crore. This SEZ is the biggest processing unit of the Nirav group’s gems and jewellery. The group used to import raw and uncut stones from Hong Kong and other places and processed them at Surat, Pune and other places in Gujarat and exported them to UAE, EU and other destinations. Shockingly, the there were only 400 employees at the SEZ as against the 1,850 shown in the records. The EPF was deposited in the names of 1850 employees. Perhaps to jack up job data and siphon money as well.

A Cultural Shift at AICC under Rahul Gandhi

We had already reported in these columns that Congress President Rahul Gandhi will not have a Political Secretary like his mother had for 20 long years. It had also been reported that he will hold Public Darbars at the AICC to meet with the common man and interact with Congress workers. It now transpires that Rahul Gandhi is undertaking a big shift in party's policy. His latest Mantra is to buy peace in his own party first and tell party leaders in states to close ranks. Before stepping up his campaign to talk to like-minded parties, he wants that Congress should regain its lost glory. Gone are the days when he was not available and had virtually become incommunicado. He never responded to SMSes, didn't care for the waiting guests and canceled appointments at will. Now he is playing on the front foot and inviting all those who left the party. He has been telling all PCC chiefs that its their responsibility to keep flocks together and spending hours and hours with leaders of each state. The way Shiela Dixit and Ajay Maken buried the hatchet and Arvind Singh Lovely returned to the party fold in Delhi is an indication of this cultural shift. He is also giving free hand to the Chief Ministers with a clear message that they will have to keep the flocks together. The target is May 2019. He told Karnataka CM Sidhharamaiah to do whatever he likes. But he shouldn't ignore other leaders. His focus is Maharashtra, Rajasthan, Madhya Pradesh, Chhattisgarh, Haryana, Himachal, Punjab and even Bihar where the Congress can stage a big come back in 2019 to take on Modi.

Caution, Chowkidar is asleep

by Harish Gupta, National Editor, Lokmat Group

CAUTION, CHOWKIDAR IS ASLEEP

So, with the Nirav Modi (NiMo) and Mehul Choksi scam hitting Rs 11,400, and still counting, the country seems to have doggedly refused to stray from its path of letting the financial systems open 24X7 for plunder. It might have begun with the Nagarwala case in the high noon of the early Indira Gandhi era. It could have evolved into the Harshad Mehta (early 1990’s) and Ketan Parekh (early 2000’s) saga, in which the two worthies in effect looted banks to fuel stock prices to dizzy heights. And, with the financial system being the platform on which the corporate system rests, the systemic destruction was in public view in 2009, with the brazen fiddling by B. Ramalinga Raju and associates of profit and loss figures of the erstwhile Satyam Computers, in cahoots with PriceWater house Coopers, the world famous auditors.

In fact that was a major reason why voters thought they’d had enough of it, gave an almighty shove to the Congress-led government,and welcomed a regime led by one who proudly promised : na khaunga na khane dunga(“neither will I steal nor will let others steal”) and will be your Chowkidar (Guard) for 24X7.

However, the two diamond traders’ recent escapades, in obvious collusion with a gaggle of officials of Punjab National Bank and their unknown patrons, has turned Prime Minister Narendra Modi’s much-quoted pre-2014 assurance into a bizarre mockery. And the dimension of the theft too is poised to leapfrog over time, as more claims accumulate with PNB due to the fraudulent Letters of Undertaking (LoU) issued to banks abroad in favour of the ‘diamond duo’. Till last year, the duo could easily float below radar as they had a key ‘friend’, Gokul nath Shetty, PNB's Deputy Manager, who had enabled them to “roll over” the credits after the termination of the statutory 90-day period. The trick of the trade lay in circulating the LoU over SWIFT, the secure telecom network that connects banks the world over, without informing the bank’s own Core Banking Solutions (CBS). It is like your partner withdrawing cash from a joint account without informing you.

Or something even more serious! Because the rogue partner can cheat you only to the extent of your own net worth. But a PSU bank is owned by none other than the President of India. No government so far has agreed to bring its stake down to below 50 per cent. So it remains a ‘sovereign risk’ which, if left unchecked, has the potential to recoil on the exchequer. 

The question is: why did a government wedded to the promise of “na khane dunga” look the other way when NiMo’s companies were splurging on unexplained and undeclared bank credit for over seven years? How did Shetty continue in the forex department of PNB despite a Central Vigilance Commission rule that the incumbent in sensitive post should be transferred after three years? Why Shetty's three transfer orders were canceled? What were the bank’s army of external auditors doing? And where were RBI’s team of hundreds of inspectors who have the powers to inspect any branch, anytime and any account ? Why was the Modi administration so oblivious of  daylight robbery in its own banks?

Well, it can be attributed to the typical Indian lethargy to fight corruption. But there is yet another explanation why Nirav Modi's shenanigans went unnoticed under the NDA for almost four years. How will the ‘bigger Modi’ assuage his critics who point at his group photo with the ‘little M’ at the WEF conclave in Davos, taken days after the CBI had filed an FIR against the businessman? Besides, Nirav Modi is the brother of Nishal, who is son-in-law of the Salgaokar family of Goa, closely related to the Ambanis, the country’s richest clan. The CFO of Nirav’s holding company being grilled by CBI is nephew of the late Dhirubhai Ambani, the Reliance founder.

In the past, the likes of Harshad Mehta and Ketan Parekh defrauded the  nationalised banks and played havoc in the share market because of systemic inadequacies. Some of these flaws were indeed fixed, which is why the capital market today is fully screen-based, with adequate disclosure norms in place. The corruption-prone badla system was replaced by a mature derivatives market. But the banking sector remained largely untouched, except that Raghuram Rajan, as RBI Governor, initiated the diagnostic steps. These showed how deep the rot had gone. The bad loans of public sector banks were 4.4 per cent in March 2014 against 2.09 per cent in 2008-09. After the change in government, as Rajan was forcing the banks to own up their losses and today the figure of NPA is over 14%. Rajan didn't have a cordial relationship with the Modi government is too well known. He went, and even the disclosures stopped. Choking under bad loans, the PSU banks began putting squeeze on total advances last year, for the first time in two decades. The banking sector’s bad loans, together with loans being rolled over and under restructuring, have hit a dizzying Rs 10 lakh crore, which is 3X the country’s tax revenues. If one looks at only PNB, its NPA has shot up three times between 2014 and 2016, from Rs 18,800 crore to Rs 55,818 crore. And roll overs are tubmling out of the closet of one bank after the other.

It is clear that somewhere someone is involved and guilty of connivance, ignorance or humungous lapse. Narendra Modi handles all appointments, transfers, postings in government & banks. He reads every complaint and mail sent to him and responds as well. His Man Ki Baat is a testimony to his actions. He gave a dressing down to the jewelers at a huge conference in 2015 and imposed taxes on them which no PM could dare in the past. But did he measure up to the job of chowkidar (sentry) when it came to guarding banks' coffers ? Pollsters say his ratings remain high. But as another election draws near, the chinks in Modi's armory are clearly showing.

(The author is National Editor, Lokmat group)

Nirav Modi offers Rs 50 crores a month repayment plan

by Harish Gupta, National Editor, Lokmat Group

A deafening silence; Is something cooking ?

Nirav Modi offers Rs 50 crores a month repayment plan 

Harish Gupta

New Delhi, Feb 18

The Modi government seems to have decided not to directly comment on the Rs 11400 crores PNB’s LoU scam. In a tactical move, the government decided to distance itself from the most embarrassing mega scam of  its regime and allow the banks and investigation agencies to deal with it.

Highly placed sources in the finance ministry disclosed here today that the PNB and all those connected with the banking industry are burning mid-night oil over the latest offer made by wanted diamond king Nirav Modi to the government. It transpires that Modi has made a latest offer to the PNB, Income Tax and ED that he is willing to repay every legitimate penny due towards him . In separate emails received by the PNB and IT and ED, Modi has said he will pay Rs 50 crores a month provided he is allowed to continue his business activities as usual. He had done no crime as made out to be and followed normal banking practices.

It transpires that the PNB management had termed the offer of Nirav Modi as “Vague” when its MD & CEO Sunil Mehta held his press conference three days ago. However, in the latest submission sent through email, Nirav Modi has offered Rs 50 crores a month to settle all his dues.

The PNB and other banks are busy fixing the financial liabilities of the Nirav Modi group companies and busy segregating the liabilities of Mehul Choksi of Gitanjali group companies. Roughly, Nirav’s liabilities are of Rs 5000 crores only if penalties, interest, etc are not included. But it is for the  PNB management to first vet the offer of Nirav Modi on merit and convey to the concerned authorities. The government says it has no role to play in what is happening between Modi and PNB. Even the Income Tax and ED are doing their work as per law and Modi will have to deal with them directly.

Yet, the government wants the resolution of the Nirav Modi issue if its within the realm of possibility. But the Rs 50 crore a month repayment offer is unlikely to be accepted as its too meager an amount.

Its largely because of this very reason that the government is moving with caution and has not declared Nirav Modi a fugitive and suspended his passport for a month. He has been issued with a show cause notice and no arrest warrants have been issued against him either.  

The deafening silence of top two functionaries of the government indicates that something is cooking and forces are at work to get at Nirav Modi back through intermediaries.

The Prime Minister addressed two functions today;  inaugurated new BJP headquarters in the morning and Magnetic Maharashtra Summit in the evening. But he did not even remotely touch upon the Rs 11400 crores PNB scam. Union Finance Minister Arun Jaitley also chose to stay away from any public glare and maintained a studied silence on the issue. Though five Union Ministers including Defence Minister Nirmala Sitharaman, Law Minister Ravi Shankar Prasad and HRD Minister Prakash Javadekar were fielded by the party to rebut Opposition charges. But the silence of PM and Jaitly is an indication that the government is keeping itself at arms length from the scam.

500 get Income Tax notice for buying jewellery in Cash

by Harish Gupta, National Editor, Lokmat Group

Nirav Modi fall out

500 get Income Tax notice for buying jewellery in Cash

Abhishek Manu Singhvi denies charges

IT took no action after January 2017 raids on Modi stores

Harish Gupta

New Delhi, Feb 20

The Income-Tax's Investigation unit at Jhandewalan has issued over 500 notices to top echelon of Delhi, Mumbai and other cities who made huge cash payments to Nirav Modi establishments to buy gold & diamond jewellery.

The first tranche of IT notices was issued to the Who's Who of the society as they purchased designer's jewellery from the Nirav Modi up-market stores by making cash payments. Interestingly, all these purchases were made by them during the pre-Demonetization era i.e. before November 16, 2016. The computer generated entries with bills and receipts were recovered in country-wide raids by the Income-tax department last year only.

Interestingly, the Income-tax department had compiled these huge bunch of documents after it conducted raids on the Nirav Modi stores in January 2017. The IT had conducted raids on other jewellers also as the government felt that bullion traders and jewellers are a major source of generating black money.

In fact, the Income Tax notice to the wife and sons of senior Congress MP and top lawyer Abhishek Manu Sanghvi in connection with the cash transactions was based on documents recovered during January 2017 raids.

The official sources said here today that the notices were not part of any political design or vendetta. Rather, the IT woke up after the CBI and Enforcement Directorate conducted raids on the premises of Nirav Modi and Mehul Choksi. The IT department took no visible action against Nirav Modi after the January 2017 raids,. Rather he flourished more and more. It was only after the PNB lodged a CBI FIR and ED raided, the IT department also woke up. It provisionally attached 29 properties and 105 bank accounts of the diamond merchant, his family and firms as part of its tax evasion probe, on February 17. The department also slapped the new anti-black money act against him for allegedly holding illegal assets abroad. In fact, the the 500 IT notices sent to biggies are based on the findings of January 2017 report.

The Income Tax Department's appraisal report of January 2017 raids, had flagged several suspected irregularities on the part of the Nirav Modi group of companies. The report said that the group accepted cash from customers for sale of jewellery and diamonds that were “over and above” the sale consideration as recorded in the account books. Modi was also confronted by the IT department and got no satisfactory explanation. During the check period, the agency found cash receipts of over ₹158 crore had been recorded from customers.

Based on the document seizures during searches, the tax officials also found that a company had received ₹284 crore from two companies based in Cyprus and Mauritius between 2013-14, in the form of share capital and high share premium. The source of funds and “creditworthiness” of the overseas companies were not explained properly.

The subsequent probe revealed that the same company had received ₹271 crore from another Singapore-based firm. The department found a huge difference in stock valuation of the group’s SEZ units in Hyderabad allegedly over ₹1,216 crore, indicating “unaccounted sale” of imported diamonds.

Fly on the wall : The 10-day silence in Rs 11400 crores LoU Scam ?

by Harish Gupta, National Editor, Lokmat Group

The 10-day silence in Rs 11400 crores LoU Scam ?

It is no secret that the diamond business of Mama-Bhanja (Nirav Modi and Mehul Choksi) came crashing on January 16 this year when an executive of Nirav Modi went to the Brandy branch of the PNB to clear the LoU. The cat was out of the bag as the handling deputy manager alerted his seniors of something fishy. All hell broke within hours and the top management got in touch with Nirav Modi who was holidaying in New York. His top executives in India including CFO Ambani kept telling the PNB that monies are being arranged. The shaken PNB management kept negotiated fo full ten days and tried hard to persuade Choksi and Modi to to arrange for collateral and matching securities. Finally, the Managing Director Sunil Mehta told the Banking Secretary in the Finance Ministry who conveyed to Finance secretary Hasmukh Adhia who in turn conveyed the biggest scam under the NDA to the Finance Minister. It transpires that Adhia informed the PMO and Jaitley too briefed the PM on the issue separately. Finally, the PNB decided to lodge a formal CBI complaint on January 28 of cheating relating to Rs 280 crores. The CBI started looking into the matter and three days later, it registered the case on January 31. The second complaint amounting to Rs 11400 crores was reported on February 13.

Value of Nirav Modi properties is Just Rs 800 Cr

The Enforcement Directorate bragged within two days of raids on Nirav Modi's establishments across the country that value of seized assets including flats and properties is Rs 5700 crores. However, the valuers and assessors of properties, jewellery and diamonds are still struggling to assess the actual value of seized assets. An informed source in the ED said the total value of immovable assets of Nirav Modi is around RS 800 crores only. The ED is yet to get hold of the actual ownership documents of all the properties if they had not already mortgaged to banks or otherwise. The ED's legal department is still struggling to discover if the properties are free from any collateral for picking up loans. What surprised industry veterans is that speed with which ED assessed the value of diamonds which is an extremely tedious process. In fact, the whole scam of Nirav Modi was to import rough diamonds and export them or sell them in Indian market at a very high price after cutting and polishing them due to his designing skills and high brand value. So far, the ED had conducted searches at over 200 premises of Modi as well as Gitanjali Gems and seized diamonds, gold and precious stones worth Rs 5700 crores based on the “tag value” or the “book Value” of the diamonds and jewelery. The book value cannot be true estimate of the goods recovered. The tag value is highly inflated. In fact, when the banks sanction loans against imported stock of rough diamonds to jewelers, there is no way to assess the true value because most valuers have no knowledge themselves or they look the other way. This is used for over-invoicing and under invoicing. The Income Tax department had also attached and froze 103 bank accounts and 40 properties of the Modi group of firms, but the value of this attachment has not been given by the IT so far.

Having declared the true value of stocks and properties as Rs 5700 crores, the ED is now in a tight spot. It transpires that the value of diamonds, gold & jewelery is in the range of Rs 1400-1500 crores. One of the reasons for this is that Nirav Modi used to import cheap quality rough diamonds and divert them after value additional in the domestic market at a very high price rather than exporting them.

Nirav Modi’s Hyderabad SEZ scam

The ED  detected that Nirav Modi's Hyderabad-based SEZ was overvalued in the books of Punjab National Bank (PNB)  huge variation in actual inventory and their book value. The difference was as huge as Rs 3,500 crore. The SEZ on an area of 250 acres was sanctioned by the UPA government and inaugurated by then Chief Minister Y.S. Rajasekhara Reddy in 2005 and then it was named as Rajiv Gems Park. In 2014, the name was changed to Gitanjali Gems Park which houses all the five firms owned by Nirav Modi and his associates.  The raids at five gems and jewellery units located at a hardware park at Raviryala village in Maheswaram mandal of Ranga Reddy district, about 30 km from the city. The actual value of 100 odd boxes and containers at the Gitanjali Gems Park, was Rs 300 crore, but the book value in the group’s computers is mentioned around Rs 3,800 crore. This SEZ is the biggest processing unit of the Nirav group’s gems and jewellery. The group used to import raw and uncut stones from Hong Kong and other places and processed them at Surat, Pune and other places in Gujarat and exported them to UAE, EU and other destinations. Shockingly, the there were only 400 employees at the SEZ as against the 1,850 shown in the records. The EPF was deposited in the names of 1850 employees. Perhaps to jack up job data and siphon money as well.

A Cultural Shift at AICC under Rahul Gandhi

We had already reported in these columns that Congress President Rahul Gandhi will not have a Political Secretary like his mother had for 20 long years. It had also been reported that he will hold Public Darbars at the AICC to meet with the common man and interact with Congress workers. It now transpires that Rahul Gandhi is undertaking a big shift in party's policy. His latest Mantra is to buy peace in his own party first and tell party leaders in states to close ranks. Before stepping up his campaign to talk to like-minded parties, he wants that Congress should regain its lost glory. Gone are the days when he was not available and had virtually become incommunicado. He never responded to SMSes, didn't care for the waiting guests and canceled appointments at will. Now he is playing on the front foot and inviting all those who left the party. He has been telling all PCC chiefs that its their responsibility to keep flocks together and spending hours and hours with leaders of each state. The way Shiela Dixit and Ajay Maken buried the hatchet and Arvind Singh Lovely returned to the party fold in Delhi is an indication of this cultural shift. He is also giving free hand to the Chief Ministers with a clear message that they will have to keep the flocks together. The target is May 2019. He told Karnataka CM Sidhharamaiah to do whatever he likes. But he shouldn't ignore other leaders. His focus is Maharashtra, Rajasthan, Madhya Pradesh, Chhattisgarh, Haryana, Himachal, Punjab and even Bihar where the Congress can stage a big come back in 2019 to take on Modi.

by Harish Gupta, National Editor, Lokmat Group

Nirav Modi plot getting murkier

Retired PNB official Shetty also untraceable

IT raids report against Nirav Modi gathering dust

Opposition considering JPC probe 

Nirav Modi reminds of Ketan Parekh scam

Harish Gupta

New Delhi, Feb 16

Even as two senior ministers, Rajnath Singh and Prakash Javadekar, joined the ranks to attack the UPA government for the Rs 11400 crores scam, the Opposition parties are veering round to the view that a Joint Parliamentary Committee (JPC) be constituted to probe the scam.

The reason for a JPC is that the PNB fraud case comes dangerously close to the 18 years old Ketan Parekh scam during the Vajpayee era. Ketan Parekh was the first conman to use the modus operandi of discounting a pay order deemed to be issued by one bank at another bank to raise money for trading in share market and jacking up prices astronomically. The end result was that when the Madhavpura Mercantile Cooperative Bank (MMCB) of Gujrat couldn't pay the discounted money to Bank of India, the whole scam was busted. The markets crashed and after the huge uproar, the then PM Vajpayee was forced to set up a JPC. Interestingly, Ketan Parekh had worked with securities' scamster Harshad Mehta of the 1990s era who incidentally was also a Gujrati and a shrewed businessman. He started trading in securities and took monies against those government securities to jack up share market.

Now 18 years later, another Gujrati, Nirav Modi, surfaced on the scene and used the same technology of “discounting” Letters of Understanding to con banks. The entire government machinery woke up from the slumber with PNB suspending 20 officials, Ministry of External Affairs suspending Nirav Modi's passport for one month, CBI and ED conducting extensive raids today.

But there is no trace of the key players; Nirav Modi, the king pin and the key PNB official who connived, former PNB Deputy Manager Gokulnath Shetty. Both are untraceable. Gokulnath shetty was posted at the on March 31, 2010 at PNB”s foreign exchange department at Brady House Mumbai. He retired in 2017 and three times his transfer orders were issued during 2013-17 as per the CVC guidelines that all key persons holding sensitive posts be shifted after three years. But each time, these orders were canceled due to “internal reasons”. K R Kamath (2009-2014), Gauri Shankar (Feb.15-Aug 15) and Usha Ananthsubramanian (Aug 15-May 17) who were at the helms of the PNB are also under the scanner of the CBI besides the current MD &CEO Sunil Mehta.

What has come as a shock to the investigators is Nirav Modi continued to thrive even after the massive raids by the Income Tax department on his premises and also of Mehul Chowksi in January 2017- two months after Demonetization. While the DRI and Customs had slapped a separate case against him of duty evasion which he paid, the IT department found Rs 4900 crores unexplained funds in his accounts. The DRI & IT had probed Nirav Modi and Chowksi several times between 2013-17 and each time he came out with flying colours. This was despite IT department finding 10 types of illegal modus operandi adopted by Nirav Modi and clearly stated that “sources and creditworthiness of these fund remained unexplained. The IT report also pointed out that international transactions to the tune of Rs 5100 crores had not reported by Modi. Incidentally, the IT report is based on the probe done by the DRI during 2013-14 which had first detected the custom duty evasion.

However, it is yet to be seen whether the ruling BJP will go in for the JPC probe demand.

Ends

by Harish Gupta, National Editor, Lokmat Group


Diamond King Neerav Modi flees India
Rs 11000 Crores fraud detected by PNB, Mumbai Branch
CBI probing biggest ever scam after Kingfisher
Vijay Mallya and Sandesaras also fled the country

Harish Gupta
New Delhi, Feb 14
Even as the Modi government was grappling with the Rs 9000 crores money laundering case against Vijay Mallya of Kingfisher fame and Rs 5000 crore scam of Sterling Biotech, another massive scam involving a sum of Rs 11000 crores surfaced.

The magnitude of the scam shook the banking industry as it involved several Public Sector Banks including the lead banker PNB. The PNB lodged two complaints with the CBI which swung into action as it involved billionaire diamond jeweller Nirav Modi and some of his firms in connection with a Rs 11,000 crore fraud case.

Highly placed sources told Lokmat today that the wanted billionaire diamond trader, had fled the country a couple of days ago when the CBI had registered its first case of cheating of Rs 280 crores against him on February 5.


If Vijay Mallya fled the country in 2016, the two Gujrat-based brothers who own Sterling biotech, also fled the country last year. It transpires that the Sandesara who were highly politically connected fled after the CBI registered cases against them. The diaries of the Sterling Biotech is said to be the root cause of the trouble which named high and mighty people. Now these sources claim that even Neerav Modi has fled the country right under the nose of the government. It was rather surprising how could Neerav Modi flee when the Income tax department had raided his premises in January and other agencies were after him.

Sources in the CBI refused to comment on the development and said that it is probing the case as PNB detected fraudulent transactions worth $1,771.7 million (over Rs11, 000 crore) in its Mumbai branch.

On February 5, CBI had booked Modi, his wife Ami Modi, brother Nishal Modi and his maternal uncle Pune-based Mehul Choksi in connection with an alleged Rs 280-crore cheating case after it received a complaint from PNB on January 29. The CBI FIR said a few public servants “committed abuse of official position to cause pecuniary advantage to Diamond R US, Solar Exports, Stellar Diamonds and wrongful loss of Rs 280.70 crore to Punjab National Bank during 2017”. Modi, his wife, brother and Choksi are all partners of these three firms, the FIR said. The case has been booked under IPC sections related to criminal conspiracy, cheating and provisions of Prevention of Corruption Act.

The PNB said in BSE filing, “The bank has detected some fraudulent and unauthorised transactions (messages) in one of its branches in Mumbai for the benefit of a few select account holders with their apparent connivance. Based on these transactions, other banks appear to have advanced money to these customers abroad,” said PNB.

The Modus operandi was simple as two employees of the PNB “fraudulently ” issued eight letters of undertakings (LOUs) and “transmitted SWIFT instructions to the overseas branches of Indian Banks” to raise buyers credit of at least Rs 280 crore for Modi’s firms without “making entries in the bank system”.

The bank alleged that it was making an “in depth” inquiry to find outstanding LOUs that have not been detected in its system. The bank also alleged that a fraudulent issuance of LoUs took place on January 16, 2018 for and on behalf of the accused firms, which approached the bank and presented a set of import documents with a request to allow buyers’ credit for making payment to overseas suppliers. The bank officials requested the firms to furnish 100 per cent cash margin for LoUs for raising buyers’ credit. The firms contested this, saying they availed of the facility in the past also, the complaint has alleged. It was at this juncture that inquiries were ordered to look into past record.


The Neerav Modi establishments across the country were raided by the income tax department and seized cash, jewellery and several documents that allegedly revealed tax evasion by his firms.

Another jolt by Modi govt. : Congress controlled clubs evicted from Lutyen's Delhi

by Harish Gupta, National Editor, Lokmat Group

Exclusive story

Another jolt by Modi govt.   

Congress controlled clubs evicted from Lutyen's Delhi

Harish Gupta

New Delhi, Feb 11

The Congress -Mukt Bharat campaign of the Modi dispensation moved a step ahead when several prestigious clubs functioning in the Lutyen's Delhi were evicted from their premises.

Be it Aero Club of India, Gliding Club of India or Ballooning Club of India, all have been evicted from the Safdarjung Airport complex from where they were functioning for 30 to 60 years. Incidentally, all these clubs were controlled by senior Congress leaders ever since their inception. Though the Safdarjung Airport has been shut down, the vast complex is used primarily for office purposes by various government bodies, tribunals and clubs.

The Aero Club of India was founded during the British regime over 100 years ago and was known as Royal Aero Club of India. After Independence, it became Aero Club of India and the Gandhis were in control as Rajiv Gandhi was a full-fledged pilot himself and late Sanjay Gandhi evinced keen interest in flying activities too. After their death, it was Capt Satish Sharma, a former Union Minister and family loyalist took control of the Club. The Aero Club of India's life members include Amitabh Bachchan which has 12 other life trustees mostly from air force and flying community. In 1984, the Aero Club's lease was renewed again for 30 years for a fee of Re one as it was a non-profit body. But the Modi government refused to renew the lease and the Club premises has been taken back by the government one fine morning.

Capt Satish Sharma who was also a pilot with Rajiv Gandhi and ruled the roast at Aero Club of India for almost 30 years and his writ ran all over flying activities in the Capital, was thrown out of the premises.

Even Vishwa Bandu Gupta who was heading the famous Ballooning Club of India, was forced to shut shop at the Safdarjung airport complex. He is also a Congressman and was a member of the Rajya Sabha. But he too was served with a notice though he had constructed a massive building on the main Safdarjung Road of the club. But the battle with the Airport Authority of India was lost as the government decided that these private clubs can't be given premium land for a song without serving any public purpose. In fact, the thinking had begun even when the UPA government was in power that these clubs should find new premises and they should conduct only training activities from the area. But the matter proceeded an a snail's pace.

With Modi government at the helms nothing works at a snail's pace, said a top official in the AAI which controls the land at the Safdarjung Airport complex. But Vishwa Bandhu Gupta proved a little smarter as he locked the building and took the Ballooning Club of India office outside the complex. He confirmed that most of the clubs have been evicted. 

Even the Gliding Club of India was forced to shut shop and all the activities relating to Gliding has come to a grinding halt. The 30-year lease of Ballooning club also ended and they too were evicted unceremoniously.

The only saving grace is Delhi Flying Club (DFC) which is also under the control of Capt Satish Sharma. But the Airport Authority of India is determined to evict it on the ground that the entire area is secured and the Club is used for marriage receptions and parties. The government's prime land cannot be used for such activities, said the senior AAI official.

Fly on the wall : Rahul Shows up, steals the show

by Harish Gupta, National Editor, Lokmat Group

Rahul Shows up, steals the show

The sea-change in Rahul Gandhi was clearly visible when the Congress president showed up along with his mother Sonia Gandhi in Parliament's Central Hall this session. If he was coy during the Winter session, he was a different guy this time. He was candid, brutally frank and didn't mince words. If his mother was economical with words, Rahul Gandhi spoke, spoke and spoke and every word was “on-record”. And he didn't stop despite Sonia Gandhi holding his hand and dropped the bomb, “I can tell you, they are not coming back. It will be a Modi-less government in 2019.” While Sonia tried to stop him but Rahul went on with assessment of political situation saying the Congress is set to increase its tally by extra 70 Lok Sabha seats and this is the minimum figure. He said by the same reckoning the BJP is set to lose at least 70 seats and no ally will accept Modi as PM with BJP getting 200 less seats. Rahul Gandhi's assessment was that it would either be an NDA government headed by someone like the current home minister (Rajnath Singh) or it would be a congress led government at the Centre as it happened in 2004. He said the party is set to increase its tally in Punjab, Haryana, Delhi, Rajasthan, Madhya Pradesh, Chhattisgarh, Maharashtra and also in Southern states. He also had a pun saying who would have imagined this scenario a year ago. Rahul Gandhi also made it clear that BJP was trying to divide the country and fight next Karnataka polls on the Hindutva plank. But they won't succeed. Sonia Gandhi's former Political Adviser was throughout with Rahul and Sonia and others virtually mobbed them.

Four Rajya Sabha seats in 4 states up for the grab

All eyes are set on four crucial Rajya Sabha seats in four states as they considered “Lose”. These four seats are up for grab to either highest bidder or a man who can swing political alliances. Of the 61 Rajya Sabha seats for which biennial polls will be held soon, these four seats are most crucial. The composition of state assemblies in the states of Bihar, Karnataka, UP & West Bengal is such that no single party can win on its own these extra seats and candidates will require extra skills to get into the Upper House.

Is Sharad Yadav Opposition candidate in Bihar?

In Bihar, if behind the scenes activities are indication, Interesting scenario is emerging for six Rajya Sabha seats. While the RJD will win two, the BJP-JD(U) combine will easily get five seats. The big tussle is for the sixth seats as Congress has just 27 MLAs in the house 243. The sixth candidate will require 40 first preference votes of the MLAs. Who can garner these 13 extra votes. It transpires that King Mahendra who is a six term MP of the Rajya Sabha and retiring, wants Congress to give him the ticket and he will manage extra 13 votes. He has earlier been all the parties in the state. But his game-plan suffered a set back with senior Opposition leader Sharad Yadav throwing his hat in the ring too. He recently met Lalu Prasad Yadav in jail along with Babulal Marandi of JVM. The Congress may also lend its support to Sharad Yadav and he will manage three CPI-ML votes and other smaller parties. The BJP-JD (U) are also working hard to divide the Congress CLP in Bihar to grab this extra seat.

Congress' dilemma in West Bengal

Of the five Rajya Sabha seats, the Mamata Banerjee-led TMC will win four easily as it has 212 MLAs in the House of 294. But a winner needs 59 first preference votes while the Congress has 42 MLAs. It will require the support of 17 extra MLAs which may come from the CPM (26) or 11 others. The Congress had offered the seat to Sitaram Yechury but his party doesn't want any truck with it. The issue is will the Congress seek CPM's support to win the RS seat or enter into some understanding with Mamata Banerjee. A search is on who can bring Congress-Mamata together again.

Whom Deve Gowda will oblige in Karnataka?

Of the four RS seats in Karnataka, Congress will win two seats easily with the support of its 124 MLAs. The BJP with the support of 44 of its MLAs may also manage to win a seat. But the fourth seat is considered lose as Janata Dal (S) of Deve Gowda has 40 MLAs and winner will require 56 votes. There are 16 Independents. Rajeev Chandrashekhar who is an Independent MP of the Rajya Sabha having won the seat with the support of JD(S) and BJP in 2012, may try his luck again.

9th seat is up for grab in UP

Biennial poll for nine Rajya Sabha seats will take place in UP and BJP with the support of 325 MLAs will get 7 seats easily. The Samajwadi Party will get one having the support of 47 MLAs. All eyes are now on the 9th seats which the BJP is determined to win as it is capable of garnering lose votes from Congress (7), BSP (19) and others (5). The Opposition parties can also get the 9th seat if they come together. Seach is on for a person who can unite them all.

Vasundhara Won’t be sacked

Various theories are doing the rounds how Chief Minister Vasundhararaje Scindia lost two Lok Sabha and one Assembly seat with a record margin in Rajasthan and took the sheen off the BJP's campaign of Congress-Mukt Bharat. One theory is that the BJP's Central leadership which is against the Chief Minister did not help her. It was strange that several secular parties like the BSP, AIMIM etc who contested every Assembly seat in Gujrat and other byelections, did not field their candidates. It became a direct battle between the BJP and Congress. The BJP central leadership says she chose candidates of her choice and didn't listen when advised. However, the high command has decided not to remove Vasundhara. However, her wings will be clipped considerably and new BJP state unit chief will be sent. It is no secret that Modi-Shah don’t like her and this defeat has pushed her to a corner.

Modi-Shah team didn’t like P K Dhumal. Result, party won Himachal but Dhumal lost. A top leader said, “We don't remove our women !”

Fly on the Wall :Rajnath's wings clipped further

by Harish Gupta, National Editor, Lokmat Group

Rajnath's wings clipped further

The Modi government buried the rule which mandated that all applications of Foreign Direct Investment (FDI) involving investments from “Countries of Concern” will no more be routed through the Union Home Ministry. Until now all proposals received from foreign investors and countries are to be referred to the Union Home Ministry for “security clearance.” Then there was a list of “Countries of Concern” which obviously means non-friendly or suspicious destinations. This was required as per the extant FEMA 20, FDI Policy and security guidelines, amended from time to time. The Home Ministry alone was to process these investment clearances even if they fall under the automatic route sectors/activities. The cases pertaining to government approval route sectors/activities requiring security clearance are to be processed by the respective Administrative Ministries/Departments, as the case may be. But over-night, the rules of the game were changed. It has now been decided that all investments in automatic route sectors, requiring approval only on the matter of investment including from the “Countries of Concern” will be processed by Department of Industrial Policy & Promotion (DIPP) under the Ministry of Commerce headed by Suresh Prabhu. No clearance of any other ministry is needed. But there is more in store; it was decided that even cases under the government approval route, also requiring security clearance with respect to “Countries  of Concern” will continue to be processed by concerned Administrative Department/Ministry. It means the administrative ministry will decide as it deem fit. In a way, Union Home Minister Rajnath Singh wings have further been clipped. It is explained by the PMO is that changes have been brought in to accelerate FDI investment in the country and smoothen “Ease of Doing Business”. Files remain pending for months for FDI clearances and this has now been dispensed with. It is for the administrative ministry to take a decision. 

Sending signal through Republic Day Tableau

The stamp of Prime Minister Modi is all over wherever he is and no one can miss his imprint on Republic Day parade when heads of 10 Asean countries lined up at Rajpath. If sources are to be believed, Defence Minister Nirmala Sitharaman spent hours and hours together along with officials of the PMO and at times with Modi to fine-tune the concept, planning and focus of the entire 90-minute drill. But what went without much notice was the presence of the Indo-Tibetan Border Police (ITBP)'s tableau that rolled down the Rajpath after 20 years. The ITBP tableau show-casing troops patrolling the China border on their newly-inducted snow scooters surprised defence & political observers as to why Modi chose it. The ITBP's tableau was the only one among the multiple paramilitary and border guarding forces that was cleared by the Prime Minister's Office in the parade.  Armed troops riding newly acquired snow scooters troops patrolling on foot and snow bunkers deployed in the icy heights of the frontier were showcased on the float. The last time ITBP tableau featured in the parade was in 1998 when H D Deve Gowda was the Prime Minister. The ITBP, that has been deployed from Karakarom Pass in Jammu and Kashmir to Jechap La in Arunachal Pradesh, guards the Himalayan borders across five states of the nation at treacherous terrains and altitudes ranging from 3K to 19K feet. Was it a message to China ? 

When Modi rejected JAM Tableau proposal 

It surprised many that no tableau depicted Modi's pet projects; Jan Dhan, Aadhaar, Mudra (JAM). It transpires that a proposal was discussed at the level of the PM and the idea was dropped for two reasons; one being that aspirations of the ASEAN countries was to be met within the given 90-minute format ed as many from the ASEAN were planned and Aadhaar was subjuciced. Its Tableau could have invited some controversy in the audience which would not have sent the right signals. 

After Misa, its Rabri in Rajya Sabha now 

An interesting scenario is developing in Bihar where Rajya Sabha polls for six seats are due to be held soon. In the 243-member Assembly, the RJD will win two seats at the back of its 80 MLAs. It is now clearly emerging that jailed RJD leader Lalu Yadav will send his wife Rabri Devi to the Rajya Sabha who will join her daughter Misa in the Upper House. The Congress (27), CPI-ML (3)  and a couple of Independents can help Congress win one seat if the party is able to garner majority of second preference votes. The Janata Dal (U) of Nitish Kumar has 71 MLAs while the BJP has 53 MLAs who can together win three seats. After lending 7 votes to the JD (U) for two seats, the BJP will still have six surplus votes. With the help of LJP (2), RLSP (2), HAM (1) and Independents (2), the BJP is trying to boil the pot for the fourth seat. Though the seat doesn't exist. But BJP chief Amit Shah may try to do a repeat of Gujrat as the party thinks it has many surplus votes while the Congress is short of 10 clear votes. Sources say that Amit Shah is wooing Congress rebel Dalit leader Ashok Chaudhary to become a candidate and break congress legislative party (CLP). 

Modi proposes, Ministers dispose

PM Modi has been impressing upon the Mps to focus on parliamentary work during the session and contribute in the best possisble way in their constituencies during the intervening period. But on the very first day of Parliament on January 29, the most embarrassing moment came when Vice President M Venkaiah Naidu kept sitting in his chamber along with leaders of various parties. But there was no one to represent the government. It was the crucial meeting of the Business Advisory Committee (BAC) where agenda for the session is fixed by parties through consensus. But there was none present from the government side. Neither Parliamentary Affairs Minister Ananth Kumar nor Minister of State Vijay Goel or even the Chief whip of the BJP in Rajya Sabha came. Venkaiah Naidu  and other leaders kept cooling their heels  and the meeting ended virtually in fiasco. Naidu was obviously furious. So much for Modi's sermons !