Nirav Modi, the founding owner of Firestar Diamonds International is finally in the net. He has been arrested by the British police in London at the behest of the Indian government’s request to the British government on charges of serious fraud committed in India.
Early life of Nirav Modi
Nirav Modi is a cunning and ambitious man. Born in Gujarat and brought up in Antwerp, Belgium, the diamond trading capital of the world, he was close to the diamond trading business from a very early age. When he was nineteen he came back from Belgium to work for his uncle Mehrul Chowski who owned Gitanjanli Diamonds and ran 4000 jewellery stores.
Nirav, the founder of Firestar
Nirav the founded his own company Firestar Diamonds in 1999. Firestar was then the sole distributor of Rin Tinto diamonds in India. In 2002, Firestar started making diamonds on a contract basis.
Nirav, the designer
In 2008, he was requested by someone to design a pair of earrings, which brought him into limelight. He soon took up the passion of designing diamond jewellery. In 2010, the Golconda Necklace designed by him brought him much fame. That was auctioned by Christis at a hefty amount. In the meantime he opened his diamond retail stores in Delhi and other parts of the country and abroad.
Nirav, the greedy man
His fame and riches made him greedy. He wanted to get richer and richer, faster and faster. In 2011 he envisaged a plan. He took advantage of the lax monitoring system of Punjab National Bank to siphon off money from India.
The plan to cheat
He got hold of the manager Gokulnath Shetty and the clerk Manoj Karat of Brady house branch, to do the job. He made them issue Letter of Undertakings (LOUs) to Nirav Modi’s companies. LOU is simply a bank guarantee. On the basis of which he got buyer’s credit from other local branches of other banks in Hong kong.
Cheating goes unnoticed
These two corrupt officials issued the LOUs on paper but did not enter the details in the bank’s main software, nor did they ask for the collateral. This went un noticed to the auditors and the senior officials of the bank.
Modi used these LOUs to get more credit from the local branches of Allahabad bank, State Bank of India, Union Bank of India in Hong kong, far away from the Indian shores, so no one could raise any suspicion. These corrupt officials used SWIFT to communicate with those local branches thus making the deal above any suspicion. The LOUs are of the 90-180days tenure, but the officials rolled them forward. At least 150 LOUs were issued in the next 7 years to Stellar Diamonds, Stellar Exports, Fine Diamonds R Us and the amount stood at 1.77 billion dollars.
The loophole in Punjab National Bank
As the SWIFT is not integrated with the core of the PNB software these commitment of guarantees could not be traced or challenged by the auditors. The auditors found that round tipping the funds was the way to pay the buyer’s credit taken from another bank.
One small slip
The things were going on very smoothly by the nexus of corrupt officials and corrupt businessman until one day LOU was requested again to which the forex dealer of the bank wanted a collateral. Modi replied that he never put up a collateral to get a LOU from the PNB and he had been doing this over the period of 7 years. The matter was brought the notice of the senior management and the Central Bureau of Investigation was called in to investigate.
Nirav Modi flees
Nirav Modi came to know that the noose is tightening and he fled India.
India seized his properties and he had fled to Belgium. India issued a Red corner notice and INTERPOL started searching for him.
He was found in London by the media and Indian government requested that he be arrested and be extradited.
Nirav Modi in the net
Today 20th March, Nirav Modi is formally arrested and will stand before the magistrate in a English Court who will decide his fate. This arrest comes as great shot in the arm of the BJP who will be able to silence the opposition. The “ the watchman slept, when the thief fled with the belongings”