I-T Dept Flagged Issues 8 Months Before PNB-Nirav Modi Scam Broke

The 10,000-page-long I-T report was not shared with any investigative agency, reports said.

Nirav Modi is an accused in the Punjab National Bank scam.

(Photo: Altered by The Quint)

Nearly eight months before the Nirav Modi-Punjab National Bank scam came to light, Income Tax officials had flagged issues related to bogus purchases and dubious loans among other things. However, this crucial I-T report was not shared with any investigative agency, reported The Indian Express.

The report on the fugitive jeweller and his uncle Mehul Choksi ran up to 10,000 pages, and also included details of serious issues, such as huge over-valuation of stocks and suspicious payments to relatives.

Report Not Shared Until Scam Came to Light

According to the newspaper, this tax report, finalised on 8 June 2017, was not shared with any other agency. It was only in February 2018, when the Punjab National Bank (PNB) scam became public that the exhaustive report was shared with the Central Bureau of Investigation (CBI), Enforcement Directorate (ED), Serious Fraud Investigation Office (SFIO) and the Directorate of Revenue Intelligence (DRI).

Key Findings of the Report

• Nirav Modi’s Firestar International received funds from three foreign firms for which Nirav Modi wasn’t able to establish the “creditworthiness”. Further, the documents submitted by two of these three foreign firms were prepared at Nirav Modi’s India office.
• Modi’s stock in the Special Economic Zone (SEZ) in Surat was over-valued. According to the report, the overvaluation was to the tune of Rs 1,216.30 crore.
• The report also states that there were “bogus purchases” made by the Nirav Modi Group and Gitanjali Group, which were to the tune of Rs 344.4 crore and Rs 2,021 crore, respectively.
• Modi’s firms had given “huge amounts of interest free loans” to group firms.
• An international transaction of Rs 515.87 crore was not reported by the Nirav Modi Group.

‘No Protocol for Sharing’

A senior tax official, while speaking to The Indian Express, said the report on Modi and Choksi was not shared with other agencies because there was “no protocol” for sharing such reports with other agencies at that time.

“After the Nirav Modi and Mehul Choksi scam, since July-August 2018, the tax department has been asked to share all investigation appraisal reports with the Financial Intelligence Unit (FIU), which in turn shares these with other agencies for investigation and appropriate action. Since July-August, we are sharing information and investigation reports on real time basis,” the official said.

A senior tax official to <i>The Indian Express</i>

What is the Nirav Modi-PNB Scam?

According to investigative agencies, Modi and Choksi, in connivance with certain bank officials, allegedly cheated the Punjab National Bank (PNB) to the tune of Rs 14,000 crore.

Firms related to Modi and Choksi, founder of the public listed Gitanjali Gems Ltd, borrowed funds overseas based on allegedly fraudulent guarantees issued by some employees at a Mumbai branch of the lender. They still owe India’s second-largest state-run bank about Rs 13,000 crore.

In January 2018, Modi and Choksi left India, just weeks before the scam came to light.

(With inputs from The Indian Express, PTI)