The diamond tycoon behind India’s alleged US$2 billion fraud

Mar 22 , 2018

Inquiry into dealings of Nirav Modi’s Firestar and his uncle’s Choksi’s Gitanjali Group sees India’s US$60 billion jewellery industry face limits on credit access

The opening of Nirav Modi’s jewellery store on New York’s Madison Avenue in the autumn of 2015 attracted A-listers from actress Naomi Watts to Donald Trump Jnr.

It also celebrated the expansion of an Indian business that is now near ruin amid an investigation into an alleged US$2 billion fraud.

Indian Congress party lawmakers protest outside the Indian parliament in New Delhi against the ruling Bharatiya Janata Party and billionaire jeweller Nirav Modi. Photo: AP

Seeing the environment here [in India] today – political, personal, social factors and security factors – I am myself not in a position to advise my client to return

Vijay Aggarwal, Nirav Modi’s lawyer

With boutique stores also in London’s Mayfair, Hong Kong, Macau, New Delhi and Mumbai, Modi achieved the global reach his relatives only dreamed of – bolstered by a necklace featuring a 12.29-carat “Golconda” diamond, which was part of the largest jewellery sale in Asia by Christie’s International in 2010.

As investigators probe Modi’s alleged use of fake guarantees from the Punjab National Bank to solicit loans, his past decade’s business dealings are also coming under scrutiny by India’s US$60 billion jewellery industry, which now faces tighter access to credit and more stringent auditing.

Modi’s company Firestar Diamond and another headed by his uncle, Mehul Choksi, who is also under investigation for alleged fraud, received about a quarter of the loans made to the nation’s gems and jewellery sector.

Nirav Modi is being investigated for allegedly using fake guarantees from the Punjab National Bank to solicit loans.

Modi, 47, and Choksi, 58, both deny any wrongdoing. Both are out of the country.

The fallout over the scandal threatens to hit the borrowing firepower of the nation’s jewellers, who are involved in cutting or polishing 12 out of every 14 diamonds sold in the world.

If Firestar and Choksi’s Gitanjali Group fail, then sales will drop by 16 per cent across India’s jewellery industry – putting in jeopardy as many as 11,000 jobs, Care Ratings said on February 27.