Big Frauds

Jewelry magnate on the run after fraud exposed

Nirav Modi supposedly was one of the richest men in India. He came from a respected family and had close connections to the government. Could he really have pulled off a huge banking fraud to finance his business ventures?

On the surface, Nirav Modi had it all. Among his many awards and accolades, Town & Country magazine in 2016 named him India’s most innovative jeweler — the country’s “diamond king.” (See Meet Nirav Modi, India’s Most Innovative and Elaborate Jeweler, by Sarah Bray, Town & Country, July 15, 2016.) Modi was considered a man with the Midas touch. His jewelry company, Nirav Modi Global Diamond Jewellery House, became an international example of his business prowess and vision by opening flagship stores across the globe and attracting top celebrities to promote the brand. In 2017, Forbes estimated his net worth at $1.8 billion. If he wasn’t attending a red-carpet gala with Bollywood stars, he could be shaking hands with prime ministers and other global leaders in places like Davos, Switzerland. (See Congress targets PM over Davos photo with Nirav Modi, The Hindu, Feb. 15.)

His Michelin star chef-catered parties were legendary, and he had no shortage of friends in high places looking to court a man who apparently could never fail. (See Nirav Modi’s Ultra-Luxe Parties Included 7-Course Meals By Michelin Chefs, by Suntra Choudhury, NDTV, Feb. 15.)

However, sometimes a story’s just too good to be true. It can even be difficult for us to believe our own eyes, especially when the press, public opinion and social media subconsciously influence us. That’s when a bank employee stumbled across what could be the largest banking fraud in Indian history. And then we have to ask, could Modi — the owner of a successful international business who comes from a well-known family and has close connections to the government — really be a huge swindler?

As reported by Reuters, on March 8, Punjab National Bank (PNB), India’s second-largest bank, filed a criminal complaint with India’s Federal Investigative Agency accusing Modi, along with multiple bank employees, of defrauding the bank to the tune of approximately $1.8 billion. (See Developments in the $2 billion Punjab National Bank fraud case, Reuters, March 8.)

PNB’s stock price plummeted. The alleged fraud has ballooned into an international conspiracy involving billionaires, diamond and gold shipments, bribes and multiple international manhunts coordinated by the Indian Central Bureau of Investigation (CBI) and Interpol. Let’s dissect this developing story and how it came to be. (See Eyes wide shut: the $1.8 billion Indian bank fraud that went unnoticed, by Krishna N. Das, Aditya Kalra, Devidutta Tripathy, Tom Lasseter, Reuters, Feb. 18, and Jeweller Nirav Modi nowhere to be seen as $2bn fraud alleged, by Amy Kazmin, Financial Times, March 21.)


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