Mehul Choksi claims innocence in PNB fraud with open letter

MUMBAI (Reuters) – Mehul Choksi, one of two businessmen allegedly involved in India’s biggest bank fraud ever, broke his silence over the weekend with an open letter to employees claiming his innocence and telling them to look for other jobs.

Pedestrians walk past an office of the Punjab National Bank in Mumbai, India on February 21, 2018. REUTERS / Danish Siddiqui

Choksi and his nephew Nirav Modi, both owners of jewelry chains, are suspected of colluding with two employees of the Punjab National Bank, the country’s second-largest state lender, in an alleged fraud of $ 1.8 billion. dollars.

The businessmen reportedly received illegal letters of commitment (LOU) from the PNB over a period of seven years and used them to obtain loans from foreign branches of other banks, mainly Indian.

Choksi, owner of Gitanjali Gems, told employees that he did not want anyone to suffer because of an association with him, but that he was unable to pay their salaries and that they were free to seek other opportunities until he can prove his innocence.

“With the recent false allegations against me for defrauding the PNB bank and the media frenzy, the situation has become serious, which is getting worse by the day,” Choksi wrote in the letter sent to employees on Friday.

The scandal, which erupted earlier this month, has shaken confidence in public lenders and once again shone the spotlight on India’s deep-rooted corruption problem.

At least a dozen people – six from the bank and six from Modi and Choksi companies – have been arrested and the investigation is continuing.

Modi, who according to Forbes magazine has a net worth of around $ 1.8 billion, owns Firestar International and an eponymous chain of stores from New York to Beijing.

On Saturday, authorities seized a farm, a solar power plant and land that belonged to him.

Also on Saturday, the Directorate of Enforcement, which combats financial crimes, said on Twitter that it took possession of 21 other properties belonging to Modi worth 5.24 billion rupees ($ 81 million) during the last blow to Mumbai and Pune, another city in western India.

Earlier in the week, the agency said it had seized luxury cars worth millions of rupees belonging to Modi.

A lawyer for Modi denied that his client was involved in a fraud.

Choksi’s company, Gitanjali Gems, has also denied any involvement in the alleged fraud.

Separately, police on Thursday filed a complaint against a Delhi-based jeweler following a fraud complaint filed by Oriental Bank of Commerce, another state-owned bank, a police source said.

The lender alleged that the company, Dwarka Das Seth International, had tricked the bank with the help of some of its officials, using letters of credit (LC) – a loan instrument similar to those used by Modi’s companies and Choksi in the alleged fraud.

Reuters could not reach the Delhi company because the phone numbers listed online were not working.

($ 1 = 64.7000 Indian rupees)

Reporting by Swati Bhat; Editing by Clélia Oziel

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