The Serious Fraud Investigation Office investigating companies linked to Nirav Modi has found that the three partnership firms controlled by him — Diamonds R US, Stellar Diamond and Solar Exports — had got issued unauthorisedly over 150 letters of undertaking (LoUs) aggregating to more than Rs 6,498 crore from the Brady House branch of Punjab National Bank, sources said. These LoUs were issued for making payment to overseas suppliers set up and controlled by Nirav Modi through dummy shareholders/directors, some of whom were former employees and interns of his two flagship companies, the investigation revealed.
The two flagship companies — Firestar International and Firestar Diamond International — have an exposure of over `4,000 crore from a consortium of banks.
The funds raised through LoUs were routed through various fictitious companies/entities for avoidance of detection and the ultimate beneficiary was Modi himself or entities related to him. These funds among other usage were used to inflate the financials of the group companies of Modi, the probe has found out.
The investigating agency is now examining whether some of the companies were mere shell companies incorporated for money laundering and camouflaging the beneficial ownership. “Investigation has revealed that Modi has set up a web of holding subsidiary structure, in India and overseas to run his businesses,” a source said.
According to sources, analysis of the financials of the flagship companies reveal numerous imports and exports from subsidiary companies set up by Modi in the US, Hong Kong, Belgium, the UAE and Israel. Some of the overseas entities are both suppliers and buyers, and there are possibilities that some of the companies may be shell companies, the SFIO reckons.
Meanwhile, of the 107 companies and seven limited liability partnerships (LLPs) linked to the Modi and Choksi groups with regard to the nearly Rs 12,700-crore PNB fraud, the SFIO has found that 40 companies and four LLPs are directly or indirectly connected with Modi, while 67 companies and three LLPs are directly or indirectly related to Choksi, sources said.
Of the said 40 companies connected with Modi, four companies were dissolved and converted into LLPs, which were not doing any business operation. One company was amalgamated into Firestar International in 2007. Around 13 companies have already been “struck off”, sources said. As many as 22 companies are “active” at present. Of these, 13 companies have either no business activities or minimal business activities.