Author: Bhumika Gurjar, Department of Law, Prestige Institute of Management and Research
Background of Nirav Modi:
Nirav Modi was born in Palanpur, Gujarat, and raised in Antwerp, Belgium. His family has been in the diamond business for centuries. When he was 19, he and his father Deepak Modi relocated to Mumbai to work with his uncle, Mehul Choksi. Choksi is the CEO of Gitanjali Group, a retail jewellery corporation with 4,000 outlets across India.
Modi went to the Wharton School at the University of Pennsylvania but dropped out. During his studies, he met his future wife, Ami, the daughter of diamond businessman Amukuraj Choksey.
Modi established Firestar (previously known as Firestone), a diamond sourcing and trading company, in 1999 after travelling to India in 1989 and receiving training in all elements of the diamond trade business. Firestar is the sole distributor of Rio Tinto’s Argyle pink diamonds in India.
In 2002, his company began producing jewels under contract. He purchased Frederick Goldman in 2005, and Sandberg & Sikorski and A.Jaffe in the United States in 2007.
A close friend asked Modi to produce a pair of earrings in 2008, which prompted him to start the brand. In 2010, he opened his own diamond store in New Delhi’s Defence Colony, followed by another in Kala Ghoda, Mumbai. 17 other store openings occurred around the world. Modi started globally in 2015 with boutiques in New York City and Hong Kong, followed by two more in Hong Kong in 2016 and one at MGM Macau in 2016.
In 2010, he became well-known for designing his “Golconda Lotus Necklace” with an antique, 12-carat, pear-shaped diamond as the centrepiece. The diamond had previously been sold in the 1960s, and Modi repolished it. The necklace had a lattice of white and pink diamonds. It appeared on the cover of Christie’s catalogue in Hong Kong and sold for US$3.6 million in 2010.
Another Modi necklace, the Riviere of Perfection, sold at a Sotheby’s Hong Kong auction in 2012. This necklace included 36 immaculate white diamonds weighing a total of 88.88 carat.
The Punjab National Bank Case:
The Punjab National Bank Fraud Case involves a fake letter of undertaking worth ₹12,000 crore (US$1.4 billion) issued by the bank at its Brady House branch in Fort, Mumbai. This makes the bank accountable for the money.Nirav Modi, a jeweller and designer, is accused of organising the fraud. The CBI has charged Nirav, his wife Ami Modi, brother Nishal Modi, and uncle Mehul Choksi, all partners in the firms M/s Diamond R US, M/s Solar Exports, and M/s Stellar Diamonds, as well as PNB officials and employees, and directors of Nirav Modi and Mehul Choksi’s firms.Nirav Modi and his family fled in early 2018, days before word of the scandal spread in India.
India’s Enforcement Directorate has began attaching the accused’s assets and is pursuing prompt forfeiture under the Fugitive Economic Offenders Ordinance.Nirav has been on Interpol’s wanted list since February 2018 for criminal conspiracy, breach of trust, deceit and dishonesty, including property delivery, corruption, and money laundering. UK officials detained Nirav in downtown London on March 2019.
The bank initially stated that two of its employees at the branch were involved in the scam, as the bank’s core banking system was bypassed when corrupt employees issued LOUs to overseas branches of other Indian banks, including Allahabad Bank, Axis Bank, and Union Bank of India, via the international financial communication system SWIFT. The transactions were spotted by a new bank employee. The bank then reported to the CBI, which is now investigating the scandal with the ED and the Reserve Bank of India.The CBI cited top executives Usha Ananthasubramanian, former CEO of PNB, executive directors KV Brahmaji Rao, and Sanjiv Sharan in a chargesheet, holding them liable for failing to implement multiple circulars and caution notes issued by the RBI.
Investigation:
In February 2018, the Indian government’s Central Bureau of inquiry (CBI) opened an inquiry into Modi in response to a complaint from the Punjab National Bank. Modi and his colleagues allegedly cheated the bank of ₹28000 Crore (about US$4 billion) by illegally obtaining Letters of Undertaking to make payments to international vendors. The suspected fraud amounts to ₹28000 Crore, with a possible loss to Punjab National Bank of up to ₹11000 Crore. The Enforcement Directorate (ED) is also looking into the fraud case that the CBI filed against him.
Modi wrote to the bank on 15 and 16 February 2018, stating as follows “In the anxiety to recover your dues immediately, despite my offer (on 13 February, a day before the public announcement, and on 15) your actions have destroyed my brand and the business and have now restricted your ability to recover all the dues leaving a trail of unpaid debts” . Modi assessed his home business at roughly Rs 6,500 crore and said “this could have helped reduce/discharge the debt to the banking system,” but claimed that this was currently impossible because all his bank accounts and assets had been frozen.
Extradition of Modi:
In April 2018, Indian authorities claimed that Modi had found safe shelter in Hong Kong and publicly requested his arrest. However, a few months later, he asked for asylum in the United Kingdom, claiming to be a victim of “political persecution” and denying all wrongdoing. The Telegraph claimed in March 2019 that he was residing in an £8 million London flat, and Indian officials requested his extradition from the UK. On March 20, 2019, he was detained in London after a warrant was issued against him. Modi applied for bail in the UK High Court on May 3, one day after his remand was extended. As of October 2020, all of his bail requests had been refused.
On February 25, 2021, a UK court granted the Indian government’s request to extradite Modi to India as a major defendant in the PNB fraud case. The UK Home Secretary signed the extradition order on April 15. Modi then had 14 days to appeal the ruling to the UK High Court, which he did on May 1, arguing that he would not receive a fair trial in India. Modi remained imprisoned at Wandsworth Prison in south-west London throughout the appeal. On June 23, 2021, a UK high court denied Modi’s request to challenge his extradition to India.
In December 2022, the Royal Courts of Justice in London denied Nirav Modi permission to appeal his extradition to the UK Supreme Court and ordered him to pay legal fee.
However, his extradition to India is unresolved. Multiple attempts to obtain status updates from U.K. officials have been fruitless, including in January 2024 during the India-U.K. Consular Dialogue. The only unilateral response supplied is that they are unable to disclose any information because legal confidential procedures are ongoing, despite the fact that the extradition order was approved upon by the competent court following necessary legal processes,” the official stated.
Arrest of his Wife:
An Interpol global arrest warrant has been issued for Ami Modi, the wife of Nirav Modi, the principal accused in the over $2 billion Punjab National Bank (PNB) fraud case, on money laundering accusations, officials said Tuesday.
They stated that the alert’ was issued by the worldwide police organisation at the request of the Enforcement Directorate (ED).
When such a warning is issued against a fugitive, Interpol requests that its 192 member nations arrest or detain the offender if they are found in their country, following which extradition or deportation proceedings might begin.
Impact of the Case:
Initially, a few of Modi’s stores stayed open for business, including one at Marina Bay Sands in Singapore; however, they have all subsequently shuttered.
In May 2018, his company, A.JAFFE, which he obtained through Synergies Corporation, was auctioned off and purchased by Parag Diamond.
Modi’s fortune has plummeted as his brand has failed. Forbes removed him from their yearly billionaires list, and on March 9, 2018, his current net worth was estimated to be less than $100 million.
The Enforcement Directorate (ED) has confiscated Modi’s properties in India, which include gold, paintings, and real estate valued around Rs 523 crore (about $75 million).
The ED has also seized four wind power facilities owned by Modi in Rajasthan, with a combined capacity of 9.6 megawatts (MW). The plants earn up to Rs 5 crore per year under a share purchase deal with Rajasthan’s state energy body. These wind power projects have been operating since 2014. In March 2018, the ED seized a 5.24 MW solar power plant situated across 135 acres in Karjat, Ahmednagar district, worth Rs 60 crore. In May 2018, the CBI and ED registered two FIRs each to investigate the case.
In March 2019, 68 items from Modi’s art collection were sold on behalf of the Indian Income Tax Department. The artwork sold for £5.3 million, including a Vasudeo S. Gaitonde painting that went for £2.6 million. The legendary music store Rhythm House in Kala Ghoda, Mumbai, is set to be auctioned after its value has been assessed. It was acquired by Nirav Modi in 2017.
On June 8, 2020, the Prevention of Money Laundering Act (PMLA) Court ordered the forfeiture of roughly Rs 1,400 crores of his property.
Frequently Asked Questions:
Can Nirav Modi apply for asylum in the UK?
However, even if the High Court approves his extradition, Nirav Modi can still file an application for asylum in the UK, like fugitive businessman Vijay Mallya has. That can delay the extradition to India indefinitely, as the UK considers the application.
Why did Nirav Modi lose his appeal against extradition to India?
After multiple twists and turns in a protracted legal case, Nirav Modi on Wednesday lost his appeal against extradition to India as the High Court in London ruled that his risk of suicide is not such that it would be either unjust or oppressive to extradite him to face charges of fraud and money laundering.
