The mild excitement in the multi-billion-dollar diamond industry on Thursday at the Central Bureau of Investigation (CBI), dropping one of the cases against the fugitive diamantaire Nirav Modi, was probably not misplaced. The clouds have not lifted yet, but this could become the template in how the larger Rs 13,000 crore scam cases, registered in 2018, are handled.
No evidence of corruption against PNB officials
The agency informed the special CBI court that, despite years of investigations, it did not find evidence of corruption under the Prevention of Corruption Act against officials of the Punjab National Bank (PNB) who had allegedly colluded with Modi in the Rs 321.88 crore credit facility scam; Modi stands accused of conducting circular transactions to siphon the money.
Accordingly, the CBI court allowed the agency to drop the case and moved it to a magistrate’s court. The CBI has reserved the right to file the chargesheet “against private individuals” without naming anyone just yet. The Rs 321.88 crore case is a small part of the larger scam involving nearly half a dozen companies of Modi and his uncle Mehul Choksi, accused of defrauding the PNB of nearly Rs 13,000 crore. Besides corruption, they face charges of cheating and conspiracy under the erstwhile Indian Penal Code. There is nothing to prevent the CBI from adopting a similar stance in the other cases, untangling the more severe charges of corruption from the less-serious ones such as cheating.
Prosecution stance and challenges
The disquiet arises also from the words of public prosecutor Vikram Singh, who represented the CBI, telling the court that while “no incriminating material was found”, the remaining charges of conspiracy and cheating are sufficient to proceed against private parties. While sufficient in theory, conspiracy and cheating have not been substantively proved against most accused in financial scams in India, whether bank officials, stock brokers, fugitive diamond merchants or industrialists. In the rare convictions, the scam money has hardly been recovered. Nirav Modi, who resorted to the tried-and-tested method of using Letters of Undertaking and Letters of Credit to siphon bank funds, would be well aware of this.
Extradition and ongoing legal proceedings
Even for the cases against him, Choksi, and other accused to reach the logical end they have to stand trial in Indian courts. Both Choksi and Modi, in jails in Belgium and London, respectively, have staved off attempts at extradition. Incarcerated in a London jail since his arrest in 2019, Modi lost his final appeal against extradition in December 2022 but has stalled his physical transfer to India, citing reasons of poor mental health and claims that he will be tortured in an Indian prison. In March this year, the UK High Court of Justice in London rejected his petition to reopen proceedings against his extradition order on “exceptional grounds”. The Rs 321.88 crore case has shown a way.
