India Swings Into Action to Bring Choksi Back to Face Trial in PNB Loan Fraud

New Delhi: Absconding diamantaire Mehul Choksi has been arrested in Belgium following an extradition request by Indian probe agencies for allegedly defrauding the PNB to the tune of over Rs 13,000 crores. The Indian authorities are now pursuing extradition proceedings to bring him back from Brussels.

Following his arrest, India has swung into action to bring Choksi back to face trial in the cheating and money laundering cases. Choksi, along with his nephew Nirav Modi and others, are named in the Punjab National Bank “scam”, the biggest ever swindling in the banking sector amounting to Rs 13,850 crores.

The Belgian Federal Public Service of Justice said on Monday that Choksi was arrested on Saturday.

Armed with the case records, a team of Indian officials is all set to visit Brussels to ensure that the extradition proceedings against Choksi are initiated at the earliest and ensure he is extradited to face the majesty of the law in India, sources said.

Based on the meticulous case records and evidence, the Indian authorities are confident that the Belgian court will accept New Delhi’s plea for extradition proceedings against the fugitive businessman.

Choksi was nabbed from a Belgian hospital on a request from Indian agencies like the Central Bureau of Investigation and the Enforcement Directorate.

Choksi's lawyer confirmed that the fugitive was arrested by the Belgian police. The arrest came amid inputs that he was planning to flee to Switzerland for medical treatment.

Choksi is the second "prime suspect" in the loan fraud case, after his nephew diamantaire Nirav Modi.

Choksi, 65, was located in Belgium last year when he went there for undergoing medical treatment. He had been staying in Antigua since 2018 after leaving India.

Choksi is being detained in anticipation of further judicial proceedings. Access to his legal counsel has been assured, Belgian authorities said, adding the Indian authorities have introduced an extradition request for Choksi.

India and Belgium have a long-standing extradition treaty.

The Interpol “red notice” against him for arrest was "deleted" sometime back by the global police body and the Indian agencies were pursuing him via the extradition route since then.

At least two open-ended arrest warrants, issued by a special court in Mumbai in 2018 and 2021, have been shared by the Indian agencies with their Belgian counterparts as part of the extradition request, the sources said.

Following the arrest, formal paperwork is being undertaken to pursue the case in the European nation where Choksi may press for bail on health grounds.

Choksi's lawyer Vijay Agarwal said his client was taken into custody by the Belgian police on Saturday (April 12). "At the moment, he is in prison and there (Belgium), the procedure is not to apply for bail but file an appeal. During that appeal, a request is made that he should not be kept in detention and he should be permitted to defend himself and oppose the extradition request while not being in custody," he told reporters.

The lawyer said the "obvious" grounds for the appeal would be that Choksi is "not a flight risk, is extremely sick and undergoing treatment for cancer". He said their legal defence would be that this is a "political case and the human condition (in Indian prisons) was not good".

Choksi, Nirav Modi, their family members and employees, bank officials and others were booked by the CBI and ED in 2018 for perpetrating the alleged loan fraud at the Brady House branch of the Punjab National Bank (PNB) in Mumbai.

The case against Choksi and others is that his firm Gitanjali Gems "committed the offence of cheating against 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 CBI has already filed two chargesheets against him in the case while the ED has filed three prosecution complaints in the related money laundering case.

Prime accused Nirav Modi, declared a fugitive economic offender, has been lodged in a London jail since he was held by the authorities there in 2019 on the basis of a legal request made by the ED and the CBI in the same case. He is contesting extradition to India.

Choksi headed the Gitanjali Group, then a well-known jewellery firm. Born in 1959, Choksi was active in the diamond industry for many years. His reputation took a hit after he was named in the PNB fraud case. Before the scam was made public, Choksi left India in January 2018 and first travelled to the United States. Later, he moved to Antigua and Barbuda and became a citizen there in 2017. Since then, the Indian agencies have been seeking to bring him back.

Choksi’s wife, Priti, is also under scrutiny for her alleged involvement in hiding the money. In 2013, she worked with CD Shah of Magus Consultancy to set up three offshore companies—Charing Cross Holdings Ltd, Colindale Holdings Ltd, and Hillingdon Holdings Ltd. These companies were based in places where ownership records are hard to trace.

According to the investigating agencies, officials at PNB's Brady House branch in Mumbai issued 165 LoUs and 58 FLCs during March-April 2017, against which 311 bills were discounted.

These LoUs and FLCs were allegedly issued to Choksi's firms without any sanctioned limit or cash margin and without making entries in PNB's central banking system to evade any scrutiny in case of a default.

LoUs are a guarantee given by a bank on behalf of its client to a foreign bank. If the client does not repay the foreign bank, the liability falls on the guarantor bank.

Based on these LoUs by PNB, money was lent by SBI, Mauritius; Allahabad Bank, Hong Kong; Axis Bank, Hong Kong; Bank of India, Antwerp; Canara Bank, Manama; and State Bank of India, Frankfurt.

The ED has attached or seized assets worth Rs 2,565.90 crore in the case against Choksi, and the court has allowed "monetisation" of all these properties.

Gfx for inside

Absconding diamantaire Mehul Choksi, arrested by the Belgium authorities following an extradition request by Indian agencies, was ‘out of the Interpol net

The extradition request was made by the CBI and the ED.

India and Belgium have a long-standing extradition treaty.

Sources said the Interpol red notice against him for arrest was “deleted” by the global police body after analysing the representation by Choksi

The probe agencies are seeking to probe involvement in the Rs 13,000 crore PNB loan “fraud” case.

The Belgian Police took custody of the second “prime suspect” in this case, after Choksi's nephew, diamantaire Nirav Modi, on April 12 in Antwerp.

“He is being detained in anticipation of further judicial proceedings. Access to his legal counsel has been assured,” Belgium Police said.

Choksi, 65, was located in Belgium last year after he reached there on the grounds of getting medical treatment sometime in November 2023.

He had been staying in Antigua after leaving India in 2018 and had taken citizenship of the Caribbean country even as his Indian citizenship is stated to be valid.

At least two open-ended arrest warrants, issued by a special court in Mumbai in 2018 and 2021, have been shared by the Indian agencies with their Belgian counterparts.

ED, CBI legal and investigating teams will be present if Choksi seeks bail on health grounds.

Nirav Modi, declared a fugitive economic offender, has been lodged in a London jail since 2019 on the basis of a request made by the ED and the CBI. He is contesting extradition to India.

Nirav Modi was dubbed a jeweller to the stars thanks to celebrity customers in Hollywood and Bollywood.

According to the investigating agencies, Choksi was issued documents from the PNB's Brady House branch in Mumbai without sanctioned limit or cash margin and without making entries in the central banking system.

Choksi used the documents to borrow from a variety of institutions.

Since the accused companies did not repay the amount, PNB made the payment of Rs 6,344.97 crore.

The ED has attached or seized assets worth Rs 2,565.90 crore in the case against Choksi