Nirav Modi, along with his family, left India in January, before the alleged PNB scam became public
New Delhi:
As the Punjab National Bank tries to recover its 11,300-crore dues from celebrity jeweller Nirav Modi, the government has said that nearly half the amount has been recovered by the Central agencies that are investigating the case. While the figure quoted - Rs 5,700 crore -- looks good on paper, getting the money back could be a long-haul process.
On Tuesday, BJP President Amit Shah said, "By seizing assets worth more than Rs 5000 crores within three days... more than half the value (of fraud amount)...a huge amount has been brought back."
Mr Shah's statement was based on the claims of the Enforcement Directorate, which has been conducting raids across the country since the fraud surfaced last week, during which, they said, they have recovered a huge amount of diamond, jewellery and gold.
On Day One of the raids, February 15, after covering 17 locations, the agency had said they seized valuables worth nearly Rs 5,100 crore. By February 17, the agency said more jewellery has been seized and the overall value was Rs 5,674 crore.
An investigation by NDTV found that jewellery valuation is a complicated and time consuming process and arriving at a concrete figure so early during investigations is not easy. Normally, the government appoints independent jewellers to examine the haul and then give an opinion, which takes time. This is also the reason that agencies usually decline to give a valuation of seized jewellery in the initial stages.
In this case, though the Enforcement Directorate initially said they followed the rulebook, seven hours later, it said in a tweet that they were going by the company's books to arrive at a valuation of the jewellery.
Two men associated with Nirav Modi's jewellery chain, however, said the company routinely exaggerated the value of the jewellery it sold. Its books, they said, were likely to contain the inflated prices, which would mean that the value of the jewellery seized by the agency was much less than the investigators are expecting.
One of the men, 30-year-old Vaibhav Khuraniya, who owned a Gitanjali franchise in Delhi, had filed a police case against Mehul Choksi in July 2016. In his complaint, he had said that the stock of gems that he was given and told it was worth Rs 3 crore, turned out to be very different in reality.
Mr Khuraniya told NDTV that when they tried to sell the products in the market, they got to know that the stock was overpriced by at least six times. "We went to government-certified jewelers to know the actual worth of the stock. They told us that the actual worth would be around Rs 40-50 lakh," he told NDTV. The franchise was dissolved in February 2014, four months after it was opened.
Santosh Srivastava, who was the Managing Director of Gitanjali between 2009 and 2013, resigned after raising his voice against such malpractices.
Expressing skepticism about the jewellery seized by the agency, he said, "I am afraid if a proper evaluation by a government approved valuer is done... I would not be surprised if the value is found to be 10-20% of what people are quoting."
There is another problem, as the Kingfisher example shows. There are few takers for assets linked to scams. Despite five attempts to auction key assets of Vijay Mallya, like the Kingfisher House in Mumbai, Kingfisher Airlines and Kingfisher brand, the banks are yet to find a buyer. Mr Mallya, too, had left the country after taking loans worth Rs 9,000 crores in the name of his defunct Kingfisher Airlines. A conglomerate of banks has been trying to recover the money.
Converting the assets to actual money also involves a multitude of legal complications.
Ravinder Gupta, Joint General Secretary of All India Bank Officers Confederation said, "It is not like these assets are available to the banks and they can immediately sell them off and can convert it into money and deposit it in their accounts. Only the courts will decide disposal of these goods and who is going to take possession."
On Tuesday, BJP President Amit Shah said, "By seizing assets worth more than Rs 5000 crores within three days... more than half the value (of fraud amount)...a huge amount has been brought back."
Mr Shah's statement was based on the claims of the Enforcement Directorate, which has been conducting raids across the country since the fraud surfaced last week, during which, they said, they have recovered a huge amount of diamond, jewellery and gold.
On Day One of the raids, February 15, after covering 17 locations, the agency had said they seized valuables worth nearly Rs 5,100 crore. By February 17, the agency said more jewellery has been seized and the overall value was Rs 5,674 crore.
An investigation by NDTV found that jewellery valuation is a complicated and time consuming process and arriving at a concrete figure so early during investigations is not easy. Normally, the government appoints independent jewellers to examine the haul and then give an opinion, which takes time. This is also the reason that agencies usually decline to give a valuation of seized jewellery in the initial stages.
In this case, though the Enforcement Directorate initially said they followed the rulebook, seven hours later, it said in a tweet that they were going by the company's books to arrive at a valuation of the jewellery.
ED had seized jewelleries, gold, diamond, precious metal & stones at stock price of Rs 5100 crore in # NiravModi case yesterday. Independent valuation has been started.
— ED (@dir_ed) February 16, 2018
ED conducted further searches at 35 locations across India in Nirav Modi case & seized diamonds, gold & jewellery worth Rs 549 crore (Book Value). Total seizure till now is Rs 5649 Crore.
— ED (@dir_ed) February 16, 2018
Two men associated with Nirav Modi's jewellery chain, however, said the company routinely exaggerated the value of the jewellery it sold. Its books, they said, were likely to contain the inflated prices, which would mean that the value of the jewellery seized by the agency was much less than the investigators are expecting.
One of the men, 30-year-old Vaibhav Khuraniya, who owned a Gitanjali franchise in Delhi, had filed a police case against Mehul Choksi in July 2016. In his complaint, he had said that the stock of gems that he was given and told it was worth Rs 3 crore, turned out to be very different in reality.
Mr Khuraniya told NDTV that when they tried to sell the products in the market, they got to know that the stock was overpriced by at least six times. "We went to government-certified jewelers to know the actual worth of the stock. They told us that the actual worth would be around Rs 40-50 lakh," he told NDTV. The franchise was dissolved in February 2014, four months after it was opened.
Santosh Srivastava, who was the Managing Director of Gitanjali between 2009 and 2013, resigned after raising his voice against such malpractices.
Expressing skepticism about the jewellery seized by the agency, he said, "I am afraid if a proper evaluation by a government approved valuer is done... I would not be surprised if the value is found to be 10-20% of what people are quoting."
There is another problem, as the Kingfisher example shows. There are few takers for assets linked to scams. Despite five attempts to auction key assets of Vijay Mallya, like the Kingfisher House in Mumbai, Kingfisher Airlines and Kingfisher brand, the banks are yet to find a buyer. Mr Mallya, too, had left the country after taking loans worth Rs 9,000 crores in the name of his defunct Kingfisher Airlines. A conglomerate of banks has been trying to recover the money.
Converting the assets to actual money also involves a multitude of legal complications.
Ravinder Gupta, Joint General Secretary of All India Bank Officers Confederation said, "It is not like these assets are available to the banks and they can immediately sell them off and can convert it into money and deposit it in their accounts. Only the courts will decide disposal of these goods and who is going to take possession."
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