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.