Nirav Modi’s long drawn extradition battle: The story behind the CBI and ED success

It was in 2016 that fugitive diamond merchant Nirav Modi realised that his end game was nearing and his fraud would have been exposed. It is suspected that a wily Nirav Modi perhaps started chalking out his exit plan. He knew that once his co-conspirator in the Punjab National Bank (PNB) Gokulnath Shetty retires in May 2017, he would no longer be able to continue with his loot. In 2016, Nirav Modi got a deed executed and inducted six villagers from Gujarat and made them majority partners in three firms namely, M/s Diamond R US, M/s Solar Exports, M/s Stellar Diamonds.

In one stroke, Nirav Modi successfully transferred the ownership and liabilities of these companies on the head of six illiterate villagers who were being paid a paltry sum of Rs 10,000. Effectively, he was preparing grounds for building a narrative that he was a minority shareholder in the companies which were receiving Letter of Understandings (LOUs) from PNB — a form of bank guarantee which facilitates foreign transactions.

The Central Bureau of Investigation (CBI) presented this evidence before the UK court which has been reflected in the order passed by Judge Sam Goozee.

“Examples of statements of dummy directors appointed to the three firms. Oghadbhai Kalsaria in a statement dated 19th March 2018 [ v8 / p. 286 – 290], a farmer is approached together with 5 others to be paid modest amounts to sign documents as partners of the three firms and were given majority shareholdings. His statement also confirms that he was illiterate and was not aware of the consequences of signing cheques, partnerships documents or account opening forms. The indenture of partnership was executed by Nirav Modi.”

Read: Nirav Modi To Be Extradited To India, UK Court Says 'has A Case To Answer For In India’

The strategy adopted by Nirav’s defence team was to distance himself from the three firms and project that he had no liability towards PNB. The court order notes, “In emails send by Nirav Modi on February 5th, 2018 to the Bank, Nirav Modi refers to the companies as “affiliated with me” He goes on to state that his ownership interests are limited to 5 per cent [ v E / Tab 13 & 18] However, in subsequent emails, it is apparent that he refers to the companies generically as the “Nirav Modi” group and in correspondence with PNB has continued to express his willingness and responsibility to resolve the issues and liabilities relating to the three companies…”

The judge, after perusing all the evidence, said, “The CBI investigation demonstrates that NDM  (Nirav Deepak Modi) had retained control of the Nirav Modi Firms but had sought to disguise the control of the firms through the use of dummy partners recruited at his behest in order to sustain the LOU scheme. This was despite the email from Nirav Modi to the PNB stating his ownership in the entitles was less than 5 per cent but he saw it as his “moral responsibility to arrive at an amicable solution.”

Read: Nirav Modi Case:UK Court Rejects Cong Neta's Testimony, Says 'didn't Disclose Affiliation'

Further explaining the modus operandi, an officer, who was part of the extradition proceedings, told Republic TV, “His game plan was to distance himself from the three companies which received LOUs in a fraudulent manner since 2011. In fact, he managed to secure 1,214 LOU’s amounting to about Rs 23,000 crore from 2011 to 2017.”

The CBI not only recorded the statement of the six villagers under Section 161 of the Code of Criminal Procedure (CrPC) but also got an email exchange between Nirav Modi and the General Manager, Finance where they were discussing the possibility of securing LOUs without providing adequate security. 

Nirav’s lawyers tried to argue that securing LOUs and getting bank credit for the same is a fair business practice. An attempt was also made by Nirav’s counsel to shift the blame on co-conspirator Gokulnath Shetty arguing that how would they know whether Shetty was following the bank procedures. To counter this, Republic TV has learnt that the agencies produced call data records of Nirav Modi and Gokulnath Shetty before the court. In fact, Nirav Modi spoke to Gokulnath even after his retirement. From the evidence produced before the UK court, it appears that in order to clear the past LOUs, fresh LOUs were issued by Gokulnath Shetty. SWIFT messages were issued and Nirav Modi would get the bank credit from foreign banks.

To this end, Nirav Modi realised that the favour extended by Gokulnath Shetty would not continue after he retires. Agency sources reveal that Nirav Modi tried his best to influence Gokunath Shetty’s successor. “In fact, he was almost successful in influencing his successor in October 2017 but failed to obtain LOUs without any margin,” said an officer. It is in January 2017 when the bank realised that something was amiss. Even the bank wasn’t aware of the magnitude of the scam. The initial complaint that CBI received from the bank was only for eight LOUs. It was only later when the bank realised that this was going on since 2011 and that too without providing any security. The court order highlights statements of bank officials recorded by CBI to corroborate the fraud perpetuated by Gokulnath Shetty and his junior.

Read: CBI Issues Statement On Nirav Modi's Extradition; Says 'vindication Of Investigation'

The big win for CBI & ED

This is perhaps for the first time that a person facing extradition has been behind bars for almost two years. It was also one of the biggest challenges facing both agencies. What undoubtedly worked in favour of CBI and ED was that they were successful in convincing the court that Nirav Modi is a flight risk.

“Nirav Modi made his own employees directors of various dummy companies. These employees had resigned but they were being paid. At some stage, Nirav Modi started threatening witnesses in the case. He wanted them to give us false statements,” said an officer.

This was also acknowledged by the court when the judge in its findings said, “Following the reporting by the Bank to the CBI, concerted attempts were made to prevent dummy directors of companies controlled by NDM in Dubai and Hong Kong co-operating with investigators.”

The agencies had recorded statements of dummy director Ashish Lad, which had a huge bearing on the judgment. The order reflects the statement recorded by the agency, “In the meeting with the dummy directors, Mihir Bhansali told them that “there is a hostile scenario in India right now, and if we go to India, we will be arrested by the investigating agencies. He also told us that if we co-operate with them, they will provide shelter and legal help”. They were told by Mihir Bhansali he was conveying the instructions of NDM in terms of the sale/purchase transactions by Dubai-based firms with the Nirav Modi firms, but they were requested “Not to disclose his name before any authority”. He also explains that Nehal Modi also came to Dubai and took their mobile phones back and issued new ones.”

When asked what really worked in their favour, one officer said, “Nirav Modi’s bail plea was rejected almost seven times. This would not have been possible without the smooth communication between all agencies, the high commission in London and the Crown Prosecution Service.” In fact, the moment the court verdict came, the investigating agencies and the other stakeholders in London got onto a video conferencing link to discuss the future course of action. Both the agencies admit that the challenge doesn’t end here as they are expecting Nirav Modi's appeal against this verdict before the High Court. “

"We are well prepared. We have produced high quality evidence which matches the UK standard. We have been able to convince the court that this is a criminal act as per UK jurisprudence," said an ED official.  

What worked in favour of the agencies to ensure Nirav’s bail plea rejected and he remains behind bars was the crucial evidence provided by ED to the London court regarding the destruction of evidence and obstruction of justice. ED officials who were part of the probe team explained that after registering the case, the focus of the investigation was to unearth Nirav Modi’s overseas plans and the manner in which the proceeds of crime was funnelled outside the country. The ED team tracked down multiple dummy directors whose statement were recorded. Of the 15 dummy directors, Republic TV has learnt that the agency recorded statements of 12 dummy directors who admitted that they were part of companies floated by Nirav Modi which did not have any real work but was used to launder money. ED found out that Nirav Modi and his brother had destroyed few servers in Dubai which had some crucial evidence in them. ED submitted audio and video recordings of the dummy directors who admitted that they were forcefully taken to Cairo against their will. Not just that they were also threatened by Nirav Modi and his aides. The same evidence was accepted by the court which has now been reflected in the court order.

Both the agencies deployed over a dozen sleuths who looked into every aspect of the case. The idea was to be prompt and provide the UK court with every possible evidence in the case.

“We had a clear mandate from the government. To do everything that is required to ensure that the verdict comes in our favour. Nirav’s defence team was also well prepared. We had to counter them at every point. When they got High Court judges to testify, we provided an affidavit from the Solicitor General. On every count, they failed to convince the court — from prison conditions to fair trial in India,” said an official. 

Commitment during the pandemic

A large part of the hearing took place during the pandemic. Despite the travel restrictions, CBI and ED team flew down to London to brief the officials. Top officers of both agencies ensured that the trial doesn’t hit a roadblock due to the pandemic.

Read: India To Seek Fugitive Diamantaire Nirav Modi’s 'early Extradition' After UK Court Order