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Nirav Modi

State-owned Union Bank of India takes fugitive jeweller Nirav Modi to court in Hong Kong over firms’ alleged defaulting on US$5.5 million in loan repayments

Writ filed at High Court claims billionaire guaranteed loans to two firms in 2011, using US$2 billion in fraudulent guarantees issued by rogue Punjab National Bank staff at a Mumbai branch.

PUBLISHED : Thursday, 27 September, 2018, 10:42pm
UPDATED : Friday, 28 September, 2018, 12:49am

An Indian state-owned bank has taken fugitive billionaire jeweller Nirav Modi to court in Hong Kong after two of his companies allegedly defaulted on more than US$5.49 million (HK$42.8 million) in credit facilities.

Union Bank of India claimed in a writ filed at the High Court on Wednesday that the Mumbai-born businessman, wanted over a massive financial scam in his home country, guaranteed two loans made to Firestone Trading Private on October 21, 2011 and Firestar Diamond on November 15, 2011.

The bank is demanding Modi – who owns a chain of jewellery shops from Hong Kong to New York and whose celebrity clients have included actresses Naomi Watts and Kate Winslet – pay more than US$5.49 million plus interest, after both firms allegedly defaulted on repayments.

Modi, 47, has been on the run since February after Indian authorities launched an investigation into his alleged involvement in a US$1.8 billion (HK$14.08 billion) scam against Punjab National Bank (PNB), the country’s second-largest state-run lender.

The Post reported in April that Indian authorities had submitted a request to Hong Kong’s Department of Justice for the provisional arrest of the diamond merchant, who was believed to have been hiding in the city before apparently moving to Britain.

Indian billionaire jeweller seeks UK asylum after ‘hiding’ in Hong Kong

Both the department and Hong Kong police declined to comment on Thursday.

In June, the Financial Times newspaper cited officials in India and Britain as saying the jeweller had sought asylum in Britain for what he called “political persecution”, a month before the international police agency Interpol issued a notice to find and arrest Modi.

India’s foreign affairs ministry last month said it had sent an extradition request for Modi to Britain.

Among crimes Modi was accused of in the Interpol notice were “criminal conspiracy, criminal breach of trust by public servant, or by banker merchant or agent, cheating and dishonestly inducing delivery of property, and prevention of corruption act”.

He was also accused of money laundering.

Modi and his uncle and business partner Mehul Choksi are accused of defrauding banks by raising loans from overseas branches of Indian lenders, using nearly US$2 billion of fraudulent guarantees issued by rogue PNB staff at a Mumbai branch. The pair have denied wrongdoing.

They left the country before the scandal broke.

Modi, who was last year ranked by Forbes as India’s 85th richest man with a net worth of US$1.74 billion, was founder of Firestar Diamond. The company filed for bankruptcy in a New York court in February.

Hong Kong staff of Nirav Modi ‘fear for future’ amid fraud allegations

He had also launched his own Nirav Modi brand with more than 10 luxury jewellery stores in locations that included Hong Kong, Macau, London and New York.

He opened his first boutique in Hong Kong in 2015 at the Elements shopping centre in West Kowloon. Last year, he opened another shop at IFC Mall and a 3,000 sq ft flagship store in an upscale Tsim Sha Tsui shopping arcade.