New Delhi: Absconding diamantaire Mehul Choksi has been arrested by Belgium authorities following an extradition request by Indian probe agencies for his 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 based on an extradition request moved by the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED), official sources said on Monday.
The Belgian federal public service of justice confirmed in an email to PTI that Choksi was arrested on Saturday (April 12).
“He is being detained in anticipation of further judicial proceedings. Access to his legal counsel has been assured,” it said, adding that the Indian authorities have introduced an extradition request for Choksi.
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.
The sources said the Interpol Red Notice against him for arrest was “deleted” sometime back by the global police body after analysing the representation made by the businessman against that notification. Indian agencies were pursuing him via the extradition route since then.
India and Belgium have a long-standing extradition treaty.
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.
Formal paperwork is being done following the arrest/detention. Legal and investigating teams of the ED and CBI will ensure their presence during the ongoing legal processes where it is expected that Choksi may seek bail on health grounds, they said.
He is reported to be seeking admission in a Switzerland-based hospital for his treatment but there was no confirmation to this claim.
Choksi’s lawyer Vijay Agarwal said his client was taken into custody by the Belgian authorities on Saturday.
“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, 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,” Agarwal told reporters.
He 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 defense 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 the ED in 2018 for perpetrating the alleged loan fraud at the Brady House branch of the Punjab National Bank (PNB) in Mumbai.
It was alleged that Choksi, his firm Gitanjali Gems and others “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 filed at least two chargesheets against him in this case while the ED has filed three such prosecution complaints.
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 this case. He is contesting extradition to India.
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 State Bank of India, Mauritius; Allahabad Bank, Hong Kong; Axis Bank, Hong Kong; Bank of India, Antwerp; Canara Bank, Manama; and SBI, Frankfurt.
“Since the accused companies did not repay the amount availed against the said fraudulent LoUs and FLCs, PNB made the payment of Rs 6,344.97 crore (USD 965.18 million), including the overdue interest, to the overseas banks, which had advanced buyer’s credit and discounted the bills against the fraudulent LoUs and FLCs issued by the PNB,” the CBI’s supplementary chargesheet in the case alleged.
The ED has attached or seized assets worth Rs 2,565.90 crore in the case against Choksi and the court has allowed “restitution” of these properties.
The anti-money laundering agency had also initiated legal process before a Mumbai court to get Choksi declared a fugitive economic offender under a 2018 Act meant for those Indians who commit a minimum Rs 100 crore worth fraud and flee abroad.
