The CBI, in its additional PNB fraud charge, stated that the fugitive businessman Mehul Choxy siphoned off more than Rs 6,345 crore borrowed from the National Bank of Punjab through companies it supported in Hong Kong.
CBI claims that Choxy appointed and controlled its employees as directors of Shanyao Gong Si Limited and 4C Diamond Distributors and Crown Aim based in Hong Kong.
The businessman used the services of LOU and FLC for over Rs 6,345 crores from the National Bank of Punjab, indicating that he had purchased freshwater pearls from these companies.
The agency said that Gitanjali Gems, promoted by Choxy, controls Aston Luxury Hong Kong, which is the holding company of Crown Aim.
It stated that Choxy was the director of Gitanjali Gems as well as Aston Luxury, Hong Kong.
Providing detailed information on the ways of working, the CBI claimed that Indian Choxy companies – Gitanjali, Gili and Nakshatra – sent pearl jewelry to Hong Kong, where it was disassembled, and the recovered pearls were sent back to them by Shaniao Gong Xi, distributors of 4C diamonds and Crown target.
Choxy helped LOC and FLC acquire pearls from Hong Kong companies, whose promissory notes were recorded by foreign credit banks based on PNB guarantees.
PNB officials at the Brady House branch in Mumbai issued 165 LoUs and 58 Foreign Letters of Credit (FLCs) during March-April 2017, for which Hong Kong companies posted 311 promissory notes.
These LoUs and FLCs were allegedly issued to the Choxy firms without any sanctioned limit or cash margin and without any entries being made to the bank’s central banking system to avoid any verification in the event of a default.
LoU is a guarantee provided by a bank on behalf of its client to a foreign bank. If the client does not return the money to the foreign bank, the responsibility falls on the guarantor bank.
Based on these loans, SBI-Mauritius, Allahabad Bank-Hong Kong, Axis Bank-Hong Kong, Bank of India-Antwerp, Canara Bank-Manama and SBI-Frankfurt lent money.
“Since the accused companies did not pay the amount used against the aforementioned fraudulent loans and the FLC, PNB made a payment of Rs 6,344.97 crore (US $ 965.18 million), including overdue interest, to foreign banks that provided a loan to the buyer and provided a discount. against fraudulent LoUs and FLCs issued by PNB, ”reads an additional sheet of allegations.
The findings were presented to the CBI in an additional list of indictments filed in a special court in Mumbai last week, which alleged that PNB was defrauded by its employees who worked hand in hand with Choxy and his company’s executives and who contributed to the fraud as part of a conspiracy.
Choxy’s lawyer Vijay Aggarwal said: “This additional charge three years later shows that this is just an attempt to cover up the anomalies that the defense pointed out in the first indictment. Moreover, the addition of Article 201 IPC on the destruction of evidence. has no legal force, since the document becomes evidence only after it is filed with the court, and the charges date back to a period much earlier than the FIR. “
CBI found that the accused companies had taken advantage of a loan of Rs 3,011.38 crores to 142 buyers and failed to make payments on time “intentionally”, resulting in losses for the bank and corresponding profits for themselves.
It is alleged that Choxy and his nephew Nirav Modi used this mechanism to obtain a loan from foreign banks that was not repaid, resulting in PNB’s liability of over Rs 13,000.
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