Nirav Modi extradition hearing | 10 things to know about PNB scam

Fugitive diamond merchant Nirav Modi is set to find out the UK court's ruling in the nearly two-year-long legal battle on February 25, 2021.

Also read: PNB scam: UK judge to rule on Nirav Modi extradition case on February 25

Modi, who was arrested in 2019, on an extradition warrant executed by Scotland Yard remains behind bars in a London prison as he contests his extradition to India on charges of fraud and money laundering in the Punjab National Bank (PNB) scam case.

The 49-year-old is expected to appear via videolink from Wandsworth Prison in south-west London at Westminster Magistrates’ Court, where District Judge Samuel Goozee is set to hand down his judgment on whether the jeweller has a case to answer before the Indian courts.

The magistrates’ court ruling will then be sent back to UK Home Secretary Priti Patel for a sign off, with the possibility of appeals in the High Court on either side depending on the outcome.

Modi is the subject of two sets of criminal proceedings, with the CBI case relating to a large-scale fraud upon PNB through the fraudulent obtaining of LoUs or loan agreements, and the ED case relating to the laundering of the proceeds of that fraud. He also faces two additional charges of "causing the disappearance of evidence" and intimidating witnesses or “criminal intimidation to cause death” added to the CBI case.

His attempts at seeking bail have been repeatedly turned down.

Here are 10 things to know about the PNB scam:

1. Nirav Modi and his uncle Mehul Choksi, both declared fugitives, are accused of cheating the PNB of Rs 13,000 crore by fraudulently obtaining Letters of Undertaking (LoUs) from its Brady House branch in Mumbai. LoUs are issued as bank guarantee to obtain credit from overseas institutions.

2. The two, their family members and employees, bank officials and others were booked by the Enforcement Directorate (ED) and the Central Bureau of Investigation (CBI) in 2018 for perpetrating the alleged fraud in the Brady House branch of the PNB in Mumbai.

3. It was alleged that Choksi, his firm Gitanjali Gems and others "committed the offence of cheating against the PNB in connivance with certain bank officials by fraudulently getting the LOUs (letters of undertaking) issued and got the FLCs (foreign letter of credit) enhanced without following prescribed procedure and caused a wrongful loss to the bank".

The ED probe found that PNB bank officials in connivance with Choksi, Gitanjali Gems and others originally issued FLCs for smaller amount within the sanctioned limit and once FLC number was generated, the same number was used for amendment by way of enhancement of FLC and increase in the amount and such enhancement of amount was done at 4-5 times higher value of the original FLC amount.

4. Nirav Modi's defence team sought to establish that the entire process comprised of “authorised though ill-advised lending” that took place in “broad daylight” and none of Modi’s actions met the legal threshold of perverting the course of justice or amounted to fraud.

5. However, The Crown Prosecution Service (CPS), arguing on behalf of the Indian government, has sought to establish a prima facie case against Nirav Modi and also to establish that there are no human rights issues blocking his extradition to India. CPS barrister Helen Malcolm has argued that the jeweller presided over a "ponzi-like scheme where new LoUs were used to repay old ones". A "ponzi scheme" typically refers to an investment scam that generates funds for earlier investors with money taken from later investors.

6. The ED recently attached assets worth over Rs 14 crore belonging to the Gitanjali Group and its promoter Mehul Choksi. Choksi has fled India and is stated by probe agencies to be based in Antigua and Barbuda. The agency has earlier attached a total of Rs 2,550 crore worth of assets of Modi and Choksi in this case.

7. A special court allowed Purvi Modi, sister of fugitive diamond merchant Nirav Modi, to become an `approver' or a prosecution witness in the Punjab National Bank (PNB) scam case. Special judge for cases under the Prevention of Money Laundering Act (PMLA) V C Barde accepted her plea for turning an approver in January. On account of being Nirav Modi's sister, she was in a unique position to provide "substantial and important evidence, information, proof, and documents and access to bank accounts, assets, companies and entities that are relevant to Nirav Modi and his actions/dealings", the plea said.

8. Nirav Modi's severe depression and risk of suicide due to his lengthy incarceration since March 2019 have been raised as factors that should lead to his discharge.

During a series of hearings in the course of the extradition case last year and early this year, Westminster Magistrates Court has heard detailed arguments from both sides about why Modi's "deteriorating" mental health condition does or does not meet the Section 91 threshold of the Extradition Act 2003 – which was most recently been used in the UK to block the extradition of Wikileaks Founder Julian Assange on the grounds of it being "unjust and oppressive" as he is a high suicide risk.

9. The PNB scam and the corresponding trials also brought to the fore another debate - on free speech. Streaming giant Netflix was facing a legal tussle with its documentary series 'Bad Boy Billionaires' about liquor tycoon Vijay Mallya, Subrata Roy of the Sahara group, IT executive Ramalinga Raju and jeweller Nirav Modi. Netflix describes "Bad Boy Billionaires" as an "investigative docuseries (which) explores the greed, fraud and corruption that built up - and ultimately brought down - India's most infamous tycoons."

However, Netflix artially released the series in October after a state court lifted the injunction.

10. Nirav Modi’s legal battle marks one of a number of high-profile extradition cases involving accused Indian economic offenders in the UK. While former Kingfisher Airlines boss Vijay Mallya remains on bail as a "confidential" matter related to his extradition to India is resolved, accused arms dealer Sanjay Bhandari’s extradition case is scheduled for its next hearing in April.

In February 2020, wanted cricket bookie Sanjeev Chawla was extradited to face charges in India and became the first extradition of its kind under the India-UK Extradition Treaty, signed in 1992.

What are the criminal proceedings against Nirav Modi?

1. The CBI case relating to a large-scale fraud upon PNB through the fraudulent obtaining of LoUs or loan agreements.

2. The ED case relating to the laundering of the proceeds of that fraud.

3. Two additional charges of "causing the disappearance of evidence" and intimidating witnesses or “criminal intimidation to cause death” added to the CBI case.

(With agency inputs)