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New Delhi: Following a corporate governance litigation in a foreign jurisdictional court that was spearheaded by the Ministry of Corporate Affairs, the Punjab National Bank Ltd. (PNB) has received $ 3.25 million (equivalent of Rs. 24.33 crore) as the first tranche of recoveries in the Nirav Modi case from USA.
The Ministry claimed on Tuesday that the maiden repatriation of $ 3.25 million was an unprecedented achievement of the Government in its fight against corporate fraud in overseas territory. “The Ministry also has initiated proceedings for disgorgement of monies from the perpetrators, i.e., the entities promoted and/or controlled by Mr. Nirav Modi/ Mr. Mehul Choksi,” it said.
The Ministry informed that upon liquidation of the debtors’ assets by the US Chapter 11 Trustee, a sum of $ 11.04 million (equivalent of Rs. 82.66 crore) was available for distribution to unsecured creditors including PNB. Further recovery therefrom was subject to other expenses and settlement of claims of other claimants.
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Punjab National Bank Ltd.in 2018 informed the Ministry of Corporate Affairs, Government of India that three companies promoted by Mr. Nirav Modi, namely M/s. Firestar Diamond, Inc., M/s. A. Jaffee, Inc. and M/s. Fantasy, Inc., had filed for Chapter 11 Bankruptcy Protection in the Southern District of New York, United States of America. PNB requested the Ministry of Corporate Affairs to support and join the bankruptcy proceedings in New York, USA in order to help PNB realize its claims in the debtors’ assets.
The US Bankruptcy Court of Southern District of New York, by its Order dated July 26, 2018 recognized the claims of PNB in the proceeds of sale of assets of the properties of the debtor companies. It also authorized PNB to issue subpoenas to compel the examination of Nirav Modi, Mihir Bhansali and Ms. Rakhi Bhansali under oath.
Subsequently, on August 24, 2018, the Examiner appointed by the New York Bankruptcy Court submitted his report. The Report explains the modus operandi of the fraud, and the manner in which the US-based employees of the debtors participated in the fraud. One prominent feature of the fraud was the apparent façade of independent companies, which were, in reality, entities promoted and/or controlled by Nirav Modi, that engaged in ‘round-tripping’ of the diamonds amongst themselves.
Meanwhile today, the Interpol issued a red corner notice against Nirav’s wife, Ami Modi, in connection with the nearly $2 billion Punjab National Bank (PNB) fraud and money laundering case. The global arrest warrant against Ami, a prime accused in the case, was issued at the behest of the Enforcement Directorate (ED), sources said.
In July, the ED had attached Nirav’s properties worth ₹329.66 crores under the Fugitive Economic Offenders Act, 2018 (FEOA).
It may be mentioned that Nirav, a diamond jewellery designer, and founder of Firestar Diamond, which claimed to have over two billion dollars in sales, has been on the run since 2017. He had reportedly left the country in January 2017, just a month before state-owned Punjab National Bank accused him of perpetrating an almost $1.8billion fraud. Nirav had also launched a brand by his own name and set up 14 stores in Mumbai, New York, London, Hong Kong, and Macau.
– globalbihari bureau
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