​This transcript has been automatically generated. If by any chance there is an error please send the details for a correction to: themorningbrief@timesgroup.com We will do our best to make the amendment as soon as possible.​

​This is an audio transcript of The Morning Brief podcast episode: Nirav Modi: Extradition or Asylum - The Scam Explained​

BG 0:01
This is the morning brief from the economic times.

Anupriya Bahadur 0:14
From being the first Indian jeweler to be featured on the Christie's catalog cover to have Kate Winslet adorn his pieces at the Oscars. Nirav Modi, which stores from Madison Avenue to Macau was living a truly glittering life. But then fortunes turned and he went from being on the rich list to a most wanted list.

BG 0:34
Rick hunt for India's biggest thief Nirav Modi is hotting up more than 11,000 Crore siphoned off one of India's biggest banks, the Punjab National Bank, this is the biggest corporate fraud that has taken place in India.

Anupriya Bahadur 0:50
It was now clear that all that clutter was just keeping the glare away from Web of dummy companies, fraudulent documents and a scam bigger than ever seen before. From fugitives to failed kidnappings to a blame game and a potential asylum. The story has more twists and turns than latest Friday release. This is the story of Nirav Modi. We get you the investigative insights

BG 1:13
you know Nirav Modi was actually investigated by other agencies. Also, though he was been told by the Income Tax department and the DRI. That information wasn't shared with the other agencies,

Anupriya Bahadur 1:24
the behind the scenes buzz of bankers,

BG 1:26
you all missed the first sign of it. It all happened in one branch by one person remained unnoticed. He was on the same desk for seven years and doing the same work. He was due for transfer twice. And mysteriously both the times there was somebody in the bank who stopped it.

Anupriya Bahadur 1:47
And what could really happen next with Nirav Modi, is he really coming home? Or is there a twist again

BG 1:53
Nirav Modi is very likely to have applied for asylum Nirav selected. Fitzgerald in the appeal. Part of his case is known as the devil's advocate. He's actually considered to be one of the best extradition barristers.

Anupriya Bahadur 2:14
It's Tuesday, November 15. I'm your host Anupriya and you're listening to the story of Nirav Modi, the fraud and fallen diamond magnet on the morning brief brought to you by the economic times.

BG 2:32
While we first head to London where all the action has been not just the last week but over the last six years between Vijay Mallya to now Nirav Modi, Naomi Canton journalist from the United Kingdom who has been reporting all the happenings for Times of India joins us now to give us the real picture and answer some tough questions is neither really coming back home, or are they loopholes left? Naomi, thank you for joining us here on the morning proof.

Naomi Canton 2:55
Oh, hello, thank you very much for having me.

Anupriya Bahadur 2:57
Naomi Nirav Modi's extradition has been held by the higher court in London in a remote order. Before we tackle what next take us through what the judgment really said.

Naomi Canton 3:06
Yes. So the judgment came on Wednesday in the administrative court of the high court told us that it was going to be a remote hand down, which means that you have to just contact the court and request the judgment to be emailed to you. It was obviously a very lengthy judgment by two high court judges. And they had listened to Nirav's barrister, predominantly arguing why the district judge in Westminster Magistrates Court had made a mistake in ordering his extradition. And that in fact, that should be overturned. And Edward Fitzgerald Casey, the barrister for Nirav, he was actually only allowed to argue on two topics. One was the the fact that Nirav could suffer torture and inhuman and degrading treatment in Arthur, a jail in Mumbai, and the other one was called Section 91, which is that it would be oppressive or unjust to extradite him. And what the barrister did was said that that was because he was depressed and suicidal, and therefore it would be very oppressive to send him to India. But the judges in their judgment went into great depth and detail about this. And their judgment was focused mainly on the argument about suicide, risk and depression. And they agreed he was depressed and suicidal and had had suicidal thoughts. But they didn't feel the suicidal thoughts were severe. And they found his depression to be moderate. So they didn't find him to have a severe depression. And he didn't have psychotic symptoms, they said, and those that combined meant that he didn't quite reach the threshold needed to be judged that your mental condition is such that it would be oppressive to extradite you because there's there's a particular threshold you have to meet. And it's actually based on case law, and it's called the turn of Proposition

Naomi Canton 5:00
So that was the finding. Another key element of the judgment was that they were really happy with the assurances given by the government of India, which were very detailed assurances about the kind of medical treatment he can access from Athur road jail, including private treatment. And because of that those assurances offset the risks of him committing suicide, although they admitted that you can never guarantee you can prevent someone committing suicide, but that the assurances Did you know the best possible job of doing that?

Anupriya Bahadur 5:30
I'm going to come and talk about a little bit more about the barrister that when defending Nirav Modi as well now mean in a bit. But I want to draw a comparison on this whole depression route, suicidal thoughts. It's something that has been used before to ward off extradition by high profile cases, as was in the case of Assange Jews as well.

Naomi Canton 5:50
Yes, that's right. So this was the exact argument Assange Jews and ironically, he had the same barrister, Edward Fitzgerald. In fact, I don't know how familiar people in India are with the Shrien Diwani case, he was that British Indian who was accused of murdering his wife was their honeymoon in South Africa. And then he went into a mental institution. So both Shrien Diwani and Julian Assange both managed to get their extradition rejected on the grounds that they were heavily depressed and likely to commit suicide. So it has been used. And that's obviously why the barrister was, was going down that route with Nirav Modi. And it was, you know, throughout the case, from the very outset, this idea of him being depressed was brought up again and again. And then the depression got worse and worse and exacerbated by locked down and the COVID pandemic. And then sort of towards the end, you know, he was heavily depressed and had been considering suicide. And that was the way the case progressed. But it didn't persuade the judges. And I did speak to a barrister about this. And he reckoned that one of the key factors is the assurances by the government of India, because he was telling me that one of the problems with Assange and Diwani were that the judges were not satisfied with the assurances from the USA and South Africa.

Anupriya Bahadur 7:04
So I want to now come to the barrister in question that Mr. Fitzgerald, he's got a key nickname as well. Now, what can you tell us because there are a lot of common clients across the board from the lot that have been asked for extradition from the Indian government.

Naomi Canton 7:18
Yeah, he's actually considered to be one of the best extradition barristers in Britain. He's known as the devil's advocate. And he has an under very good reputation for himself because he has acted in some very high profile cases he acted in Lawrie Love's case the computer hacker that the US was seeking to extradite. And he got that extradition completely stopped. He also represented Jabir Motiwala, who was said to be the CEO of the D company in Pakistan, and he had actually been caught in sting operation by the FBI trying to sell drugs to these FBI agents. So there was considerable evidence against him. But in that case, Edward Fitzgerald managed to get the extradition request withdrawn, and Jabir Motiwala went back to Pakistan a free man. And in fact, Neeraj selected Fitzgerald in the appeal part of his case, and he had actually used Claire Montgomery in the Westminster Magistrates Court, which was the same barrister that Vijay Mallya had used and he obviously, as you know, Vijay, Mallya lost all his cases, so Nirav on appeal decided to switch to Fitzgerald,

Anupriya Bahadur 8:23
which gets us to the next question. Now me what is the road ahead? Is it a sure short homecoming for Nirav Modi or does he have any other routes at this point to appeal this?

Naomi Canton 8:34
Yeah, it's very interesting. He's going to go down the same direction that Vijay Mallya did, because obviously the same happened to Vijay Mallya, he lost his appeal in the High Court. So the next step is to get a point of law of public importance certified by the High Court that there is such a point of law of public importance in his case, and his barrister may well use the turn of proposition for that, and then he has to get leave to appeal in the Supreme Court. That means permission to appeal and he can apply for permission in the high court or in the Supreme Court to get that. But if he doesn't get this public point of law of public importance certified, then, in fact, that's the end of the road because the Supreme Court cannot hear his case. So that's gonna be his first step. And then the next thing he can try if he fails at that is to get an injunction from the European Court of Human Rights, which is known as a rule 39. And that would be him saying to them that there's an immediate risk of threat to his life or health in this jail in India, and they have to stop his extradition immediately. And that's something that Sanjeev Chawla tried before he got extradited to India, but his was rejected. And most of these requests are rejected, though a small number get through. So that would be his next step. And then, if that failed, he would actually have to get extradited within twenty

Naomi Canton 10:00
The eight days. However, in Vijay Mallya's case, it did fail. Although Vijay Mallya didn't apply for a rule 39 He only tried the Supreme Court. He in Vijay Mallya's case he didn't get the point of law of public importance certified. So then we were expecting him to be extradited within 28 days of that decision. And in fact, he hasn't gone back.

Anupriya Bahadur 10:21
So which brings me to the point Naomi about asylum. As Nirav Modi, applied for asylum, would we know if he'd already applied for asylum? Are those applications public because we're not very clear on how these rules work in the United Kingdom, because for Vijay Mallya, as well, it was only after his extradition orders were put through that we realized that he put in for an asylum application already.

Anupriya Bahadur 10:42
Yeah, the interesting thing is that the asylum application, even the Indian government wouldn't know about it. That so in fact, it's very secret, and the reporters wouldn't know about it. It's not public. And these are private hearings that happen under different tribunal all together. I think it's the immigration and asylum tribunal, and they have their own judges and it's closed court. It's not open to the public. Even the judgments are private, they're not disclosed. So if somebody applies for asylum, but no one knows about it, and if they get the asylum, no one knows about it either. So the Indian High Commission wouldn't know about it. What we do know is that every time we've inquired about it, we've been told that Vijay Mallya hasn't gone back for legal reasons. And if I've tried to get asked more about that barrister I spoke to said it's likely to be either asylum or it could be the civil cases that he's got going in the UK, because he's got quite a few civil cases like his bankruptcy appeal and cases like that. It could be this because of those that hasn't gone back. So we're not exactly sure why Vijay Mallya hasn't gone back. Nirav Modi is very likely to have applied for asylum, I would say, and he may have applied already, you wouldn't necessarily wait till the final judgment comes and then put in your asylum application. You would probably have done it already like that during the process after your initial extradition court hearing or something. But the asylum application can take years because there's lots of different layers of appeal. So it can drag on for quite some time. And if Vijay Mallya has applied, he could still be in the process. We don't know whether a decision would yet have been reached in his case.

Anupriya Bahadur 12:20
Naomi I just want you to draw the comparisons and how these cases are very different. You know, the illustrious Bad Boy billionaire Vijay Mallya, which you would have had the opportunity to see him go in and out of court, but in Nirav Modi's case been in jail, and then there was COVID. So there was video links and the case was quite behind the scenes. Compare the two cases for us.

Naomi Canton 12:39
Well, Vijay Mallya was great fun to cover as a journalist, because he always turned up in a chauffeur driven car with his girlfriend, the one who had been an air hostess with Kingfisher Airlines. And they would always come together, sometimes his son would come, and he sort of turned up with shades on and you know, dress like a model. And he'd always have a little entourage of people carrying things for him. And he'd always sort of stand outside court and get his cigar out and his posh, lighter and sort of strike his cigar. And then we'd all surround him and then he'd start giving us little sound bites and at lunch, Vijay, Mallya, it was very odd, actually, because he always used to go outside at lunch. And then of course, all the media would rush outside, and then he'd be able to give a statement. So I think he actually quite enjoyed the publicity. And then at the end of the case, it would be exactly the same. So you know, it was always high drama and great fun. Nirav Modi, as you probably recall, he was actually found by The Daily Telegraph wearing that Oxbridge high jacket, sort of wandering through the streets near Oxford Street. And they tried to interview him, and he just kept saying, No comments, and there's a video of it, and then he flagged down a taxi. You please just confirm whether you've applied for political asylum. That's all I want to know.

BG 13:54
Can you confirm that?

Nirav Modi 13:56
Sorry, no comment?

Naomi Canton 13:59
Well, it was about a week or two after that, that he got arrested, opening a bank account in Metro Bank. And then he's been in custody since that moment, he was then brought to court the next day for his preliminary hearing. And they get asked, Do you want to be extradited to India or not? And then they say no, and then it becomes an extradition hearing. And then he got taken to ones with jail. So He then used to come in person from the jail. So he'd come in a prison van, and then come up to the dock and stand there. I remember his first few hearings, he was really smartly dressed. He's looked like the same guy, you know, like the diamond dealer that hangs out with celebrities. And then I think, obviously, because of COVID. It then became video links. And then he's only ever come on video links since then from prison. So we just sort of see him on video in the court and he sits there with all his papers, but over time, and as they started to talk about this depression, that he had sort of grew a beard and he started to look much more disheveled and he put on weight as well. He'd

Naomi Canton 14:59
didn't look same as the initial Nirav that used to come in person. And then they said he was taking antidepressants and things. This was when he'd been living in this swanky apartment, just Oxford Street, which was where he was living when he was running this jewelry business called Diamond holdings. Now remember, there was this moment when the barrister spoke about him having a dog. And it was one of the reasons why he should get bailed, you know, and I remember he looked really upset when this dog got mentioned.

Anupriya Bahadur 15:26
Naomi while we have you, I want to clarify something. There's a lot of speculation bars around the new trade deal that's being signed between India and the UK. Will extradition be part of that trade deal? Will it be incorporated in some way? What are you picking up? Because I understand that you do have some clarity on that?

Naomi Canton 15:44
Yes, I have checked this out because it's often said on Twitter and elsewhere in social media that, you know, if the UK extradite Vijay Mallya and Nirav Modi, then Prime Minister Modi will sign the trade deal within seconds. And that's just speculation on social media. It's not anything that is a fact. And when I checked it out, I was told that there was just no correlation at all the these extradition cases have no connection to the trade deal. They're not influencing the trade deal. And the trade deal has nothing to do with these two cases. And that's that came from the Indian government. So I think that probably, you know, is the truth, because it would be very odd if a single person was sort of held to ransom over this trade deal. And of course, in the UK, these cases are all going through the UK courts. So again, when the Indian public criticize the UK government for not extraditing these people, it's actually not the UK government that's making the decision. It's the judges and the court system. And we have a separation of powers. And our our judiciary is separate to the government that so it does a lot of people try and bring it into the political sphere. But in fact, it's literally just going through our court system.

Anupriya Bahadur 16:58
And that settle's the speculation on the trade deal. But this case and the drama in this case, Nirav Modi far from over. Thank you, Naomi, for joining us here in the morning brief and I'm sure we'll catch up with you soon as more twists and turns appear.

Naomi Canton 17:10
Thank you. It's lovely chatting to you.

Anupriya Bahadur 17:12
Well, that was now and what could happen next. But where did it all start? We take your rewind to bring you back the full story of Nirav Modi.

Anupriya Bahadur 17:26
I recall that it was Valentine's Day 2018 and red was flashing all over the screens as India's second largest bank, Punjab National Bank PNB on earth what would be the biggest scam faced by an Indian bank yet 11,000 crores and counting with the main cast featuring fugitive mama Bhanja duo Nirav Modi and Mehul Choksi. What followed was complete pandemonium from billionaires on the run to a blame game between the RBI and the center, and bankers scrambling to assess the full extent of the hit and investigative agencies jumping into action, but after the key accuse had already taken off, and as many a way to potential return of Nirav Modi. The Economic Times team gets to the ringside view of the scam. Joining us Sangita Mehta buzzing with everything to do with banking, and Rashmi Rajput was a hawk sigh when it comes to investigations. Welcome, ladies.

Rashmi Rajput 18:17
Thank you so much. Anupriya. Thank you for having me.

Anupriya Bahadur 18:21
Sangita, let's start with you. For the rest of us. It was a big day of disclosure on Valentine's Day. But behind the scenes, I'm sure it was a classically hectic breaking news day for the reporters. Tell us how it really all played out?

Sangita Mehta 18:33
Yeah. PNB announced about it first thing in the morning when the exchange open. But it was quite a noisy day, because we were just trying to figure out what is this all about? Like what is an LOU. And we've never really looked into how LOU could be a scam and you know, the sheer magnitude of the fraud, it was 1.7 7 billion which in today's time it will be roughly 14,000 Crore back then it was 11,300 crore. But then it was these things which really caught us and we were calling banks to understand where, you know, where is this taking us and things like that. But we all missed the first sign of it. This was evolving, and it was happening behind the same but we never realized because on Fifth of Feb, the bank gave a very innocuous notice to the exchange that it's suspected of fraud of 280crore at one of its branch. That's it. And then the second line was even more interesting. It said that the fraud is reported to the regulatory agency and investigative authorities. So they didn't mention anything about FIR or the CBI involved or any such thing. It's only in hindsight, we know that, you know, it was detected there at least a month ahead of 14th of Feb. And you know, in those days, I used to put a Brady house branch very regularly. I knew a lot of people out there so personally for me, it was quite a shock that these are the people whom I used to regularly interact and things like that. And the other side these banks were all blaming PNB

Sangita Mehta 20:00
PNB itself was kind of, you know, trying to water down the whole thing that oh, we have recall the loan from Nirav Modi, everything is going to be okay. And by the end, Nirav Modi had already left the country Nirav Modi and Mehul Choksi, both of them now.

Anupriya Bahadur 20:15
Right, and we'll get to that timeline of how the accused were actually tipped off much before the agencies were, which gets me to you Rashmi now, what did the investigative agencies do next

Rashmi Rajput 20:26
29th of January is when PNB are registered its official complaint with the CBI. And that time around it had pegged the scam to around 280 crores because the amount of LOU's that time issued or whatever they could find was amounting to 280 Crores, I'll just tell you one interesting anecdote, you know, around LOU's. And what happened is during the course of the investigation, the CBI went to raid, they figured out that most of these LOU's, which were original LOU's signed by Gokulnath Shetty, which was one of the accused in the case that they were stacked at, in the office of a very leading law firm in Mumbai. So the CBI had got this information, they wanted to act on it fast, because they thought that you know, this was very important is crucial piece of evidence. So when they went there, they were no LOU's to be found, because he had already moved because somebody had already informed the law firm. And one of the accused was arrested by the CBI. He subsequently had during the recording of the statement said that he actually had got three to four tempos outside that law firm and move that with those LOU's from that law firm to a small room,in Zaveri Bazar, so subsequently the CBI went and raided it and then they found those original LOU's which was stack in a small room of around like 200 square feet. So think about it Anupriya you had a scam of amounting to 14,000 crore, which is actually all the documents the main evidence was in a room which is less than 200 square feet. So, this is one of those, you know, interesting anecdotes of the investigation. What was very important for both the CBI first complaint was registered by this PNB on the 29th of January, the CBI in a day or two's time, they registered in a FIR, and subsequently the enforcement directorate stepped in, and they registered a money laundering offense. And then you had both the CBI and the ED probing the case of probing both these the nephew Uncle duo and initially the scam which the PNB bank had said was around 280 crores it has now ballooned and it is now around more than 23,000 crores

Anupriya Bahadur 22:32
rather large difference between the initial estimate of the fraud and what it actually came out to be Sangita take us through the nature of the fraud because that is critical in understanding how this actually all transpired.

Sangita Mehta 22:44
So, basically PNB issued a letter of undertaking to this mama Bhanja, that is Nirav and, Mehul Choksi's companies, what is a LOU LOU is like an implicit guarantee that if companies of Nirav Modi and Mehul Choksi doesn't pay an I as PNB take the responsibility to make good the difference or whatever is the gap. Now, this Nirav Modi's company takes this letter goes to the Hong Kong branch of Union Bank. So already the money siphoned out of India when he goes to Union Bank right in Hong Kong. And he tells them that transfer this 100 million to my ex company, which is probably his own personal account, and now he gives an instruction to transfer it to some third account. So what happens is the money moves from PNB, India, to Hong Kong branch of Union Bank, and from the Union Bank, Hong Kong branch, it moves to his personal account. Union Bank is paying this money to Nirav Modi, because it's backed by LOU, which says that, you know, if there's a default to PNB will pay pnbs government owned bank Union Bank, government owned bank, they both will trust each other and this thing goes on. So Union Bank then makes a claim to PNB that you know Nirav Modi has raised this money from us so you kind of make good the difference or make good that money. So PNB then credits 100 million to Union Bank. And you know, the RBI rules are very clear. If there's a LOU which is backed by a bank, another Indian bank has to honor it. And it won't believe PNB issued loi of 293 293 LOI's were issued by PNB. In this entire eight years, you know the cycle of 177 billion, and it remained unnoticed. I mean, it all happened in one branch by one person remained unnoticed.

Anupriya Bahadur 24:46
So Sangita. This is one person that we're talking about the primary person responsible at the desk at PNB. It's quite amazing how much power and how consistently he wasn't just this desk to be able to execute all of these LOU's for Nirav Modi and Mehul Choksy's company

Sangita Mehta 25:01
yeah and and you know, even more surprising was that he was on the same desk for seven years and doing the same work you know in a bank the policy is that every three years you will have to be transferred at least be transferred out of city or you know on a different bank branch kind of thing. But in this seven years he was due for transferred twice and mysterious they both the times to somebody in the bank who stopped it

Sangita Mehta 25:29
that still remains a mystery that how did that happen? That after this episode, where Gokulnath Shetty remain in the branch, there was a policy initiative that you know, no person in any bank in any branch be it private PSU, whatever, can be there for more than three years.

BG 25:49
So Sangita, there are large amounts, multiple LOU's being signed off from a single desk, no reconciliation and no red flags, where did the tide turn for the branch to realize something was wrong.

Sangita Mehta 26:03
That is very interesting. So what happened is, as I said, it was all done by one person, his name was Gokulnath Shetty. And he was a very junior person, Deputy Manager, you know clerical level. So he issued these letters, kind of he would roll roll over these letters of LOU. Till such time he retired in December 2018. And once he retired, the new person came, the new stuff was deputed in his place. By then, in the month of December, he had already issued some LOU's to Nirav Modi and Mehul Choksi companies. Now those LOU's had already reached the Hong Kong Dubai, London branches of Indian banks. And those branches came back to PNB in the month of January, making a claim for that amount. When they came, the new staff said that I'm not authorized to give you because these LOU's are not backed by securities. And there is some mismatch. He raised this issue with his senior. And then in the mid of January, the entire Brady bra house branch staff realized that there is a discrepancy in this entire thing. And that's how the whole chain broke. So even as PNB discovers it comes to the investigative agencies, it's all too late. Because as the playbook learned, even during the previous cases, even such as Mallya, they had made the getaways before the agencies even came along. In fact, Rashmi there was some stark revelations about how early these exits were planned by the likes of Nirav Modi and Mehul Choksi, who in fact, already had a citizenship of another country.

Rashmi Rajput 27:43
Exactly, exactly. In this case, also in Autopia, they had planned escape well in advance if our sources are to be believed this happened in around April of 2017 itself. Now, what these people tell us is that around that time is when Gokulnath Shetty had, for the first time told both Nirav Modi and Mehul Choksi that, you know, he's going to retire in January 2018. And the new staff that would be taking over they might not be that cooperative with him and with them and they might not be able to carry forward issuing the fraudulant LOU's. So that is when both of them decided that this was going to be an end of their dream grant. So in around June of that year, Nirav Modi had already shifted his kids to to the US. And on first January when Gokulnath Shetty retired on the same day, both Nirav Modi, his wife and his brother in law, they left the country and five days later your Mehul Choksi leaving the country. So they had actually planned their escape well in advance before the PNB bank could go and even register a case and what the CBI had also found out that, you know, in the month of November, two of its executives, two of the officials who later both agencies managed to bring them back, they had also escaped. So you know, all this was happening in 2017. And then it was only in 2018 when their huge explosion happened when PNB finally figured out that you know, there was this massive scam that was happening at that Daddy house, a batch of dads and but it was a little too late for them.

Anupriya Bahadur 29:19
Rashmi, you mentioned about Nirav Modi's, his wife and brother in law but the other interesting character in this entire plot was Mehul Choksi, who as we mentioned had already taken a valid citizenship and moved to another country. When according to the investigative agencies, Rashmi does Mehul Choksi fit into this entire scheme of fraud.

Rashmi Rajput 29:38
Now he is actually responsible for more than 50% of the scam. So you have around 6500 Crore which was back towards Nirav Modi and 7000 Odd crores, which was paid towards Mehul Choksi talking about the initial days in May 2018. But the CBI had pegged the scam toaround 13,500 crores the amount attributed to

Rashmi Rajput 29:59
Mehul Choksi is more than that of Nirav Modi. Now, in case of Mehul Choksi what also happened is somewhere in May of 2018, there was this spa between the agencies because Antigua the country came out saying that Mehul Choksi is they have arrested him. And that's when the Indian agencies were trying to figure out how did you manage to get the citizenship? So then you had a spa that happened between the mea and the Mumbai police, where the mea was saying that the Mumbai police gave him some T colors. The PCC which is the verification the police verification certificate based on which the Antigua government had issued the citizenship to him. And the Mumbai police said that, you know, when we had done a verification 2017 There was no case against him. So how can we not give him a clearance certificate? So there was this so many things that were happening. And they figured out that actually he was he had done this all this activity of getting the citizenship happened in 2017. itself, and he managed to do it. So Mehul Choksi a he got the citizenship and then later subsequently he claims now that there was an attempt by the government to kidnap him.

Sangita Mehta 31:08
That's what I want to come to you.

Sangita Mehta 31:11
A lot of our listeners, you don't want to really know because we've read about it. Mehul Choksi after ages came back on air to talk about being distressed. So what can you tell us about the very famous point kidnapping Rashmi?

Rashmi Rajput 31:25
Okay, the allegation that Mehul Choksi had leveled was that he was kidnapped by the Indian government. And that, you know, there were these attempts to bring him back, the government was trying to make him or take him back to India. Now, those are allegations right, or we won't be able to substantiate whether that really happened and whether that was an failed attempt by the Indian agencies, but he has registered a case of claiming that he was kidnapped by the Indian agencies. So, that is where it stands officially. But if you see in the case itself, there are a lot of intriguing factors, because he went missing, then his wife registered a complaint and then he was found in another country Dominica. And then subsequently, Dominica also dropped the charges against him. And now he plans to even register a case of kidnapping. So it is the it's very interesting about how things work in the Caribbean island.

Anupriya Bahadur 32:22
So now, by this point, the main cast and crew of the scam have moved overseas Sangita This brought about a big back and forth between the center and the gatekeeper of the banks, the RBI I recalled from the late Arun Jaitley to then very suddenly vocal Urjit Patel as well.

Sangita Mehta 32:39
Yeah. So, basically, the question was, who will foot the bill nine it was a huge amount of 12,000 Crore that had to be provided otherwise, the bank will collapse finance ministry kind of raise this issue that you know, the RBI was a gatekeeper, as you correctly said that they didn't kind of regulate banks properly. And then I have this like, you know, very interesting comment, which I just wanted to read out from a speech that Arun Jaitley made back then, that he said that we must always remember the regulators have a very important function, they ultimately decide the rules of the game and they must be the third eye, but unfortunately in Indian system, it is we politicians who are accountable and not the regulators. Now, this was a very very provocative statement from our Arun Jaitley. And then will it was very natural that Urjit Patel will retort Na And then he gave his famous speech that success has many fathers, but failures have none. I mean, if you recollect, when he said that the RBI should be given powers to regulate PSU banks as regulate private banks. And of course, then six months later, he he resigned as you want to collect the sample, Urjit Patel

Sangita Mehta 33:57
put in his papers.

Anupriya Bahadur 33:58
But Rashmi as the fingers are being pointed between the centre and the RBI, there's also much to be said, between what was happening the investigative agencies, and 2017 as early as 2017 Nirav, Modi was already being probed by the Income Tax department. And yet the asymmetrical information between agencies is what aided the release or the movement of the likes of Nirav Modi and Mehul Choksi. Share with us what was happening behind the scenes and also kind of the moments that have stuck with you as you've covered this massive case.

Rashmi Rajput 34:31
Never a lot of interesting, I'd say so to say milestone kind of while you cover the case. You know Nirav Modi was actually investigated by other agencies also, Income Tax department was investigating him the DRI was investigating him. I remember when he used to go to the DRI office. He use carry his mineral water and he was very particular about drinking only that particular brand of water and he was very well dressed you know

Rashmi Rajput 35:00
It was very difficult to say that this person is later going to become the face of white collar offense in India, though he was being probed by the Income Tax department and the DRI, that information wasn't shared with the other agencies. So what actually the Nirav Modi case did was that, you know, it has brought many of the agencies together. So now you have a lot of coordination that happened between the agencies.

Anupriya Bahadur 35:25
Sangita Rashmi says that the agencies have learned a lesson and have been better at sharing information. But Has anything changed on the regulation and supervision part when it comes to PSU banks and bankers in general? Have things changed on the ground? Or are we still susceptible to hear headlines like this, once again,

Sangita Mehta 35:42
this particular thing, gap is more or less bridged core banking is linked to Swift, and that is a regular risk based provision, which is an online and the RBI has started the Skrillex system where each bank has access to how much exposure other banks in the system has to a particular company. But it's not fully watertight as yet, because RBI still doesn't have that kind of regulatory powers. RBI cannot supersede the board of PSU RBI cannot have been removed the MD of a bank, no PSU bank, he can't even say that you know, that this person is not fit to run the PSU bank. But point is that we have improved but there is a lot of room yet. A lot of room to get better. Well, on that note, thank you so much. Sangita and Rashmi for your time. And I'm sure this case is far from over, as they say a picture abhi baki hain so more twists and turns still expected. In the Nirav Modi saga.

Nirav Modi 36:41
I always will have sleepless nights, but we will move forward.

Anupriya Bahadur 36:47
That was Nirav Modi over six years ago talking to the BBC about having sleepless nights over massive expansion. And I'm sure he continues to have sleepless nights but for very different reasons. The scam expose cracks in information shared in supervision and also disclosures. But as Naomi pointed out, it may be too early to plan a homecoming for the flawed and fallen time magnet near a smoothie. With that I have host Anupriya I'm signing off on this edition of the morning brief brought to you by the economic times.

Anupriya Bahadur 37:18
A big thanks to the team that helped put this together our producer, Sumit Pande sound engineer Indranil Bhattacharjee and a special shout out to the team at BCS ragasur for the rocking signature tune we debut today. Executive producers for TMP Anirban Chowdhury Arijit Barman and yours truly do follow us to get notified when our episode drops next, which is every week Tuesday, Thursday and Friday. It promises to be an action packed week ahead. Thank you for tuning in.
BG 0:01
This is the morning brief from the economic times.

Anupriya Bahadur 0:14
From being the first Indian jeweler to be featured on the Christie's catalog cover to have Kate Winslet adorn his pieces at the Oscars. Nirav Modi, which stores from Madison Avenue to Macau was living a truly glittering life. But then fortunes turned and he went from being on the rich list to a most wanted list.

BG 0:34
Rick hunt for India's biggest thief Nirav Modi is hotting up more than 11,000 Crore siphoned off one of India's biggest banks, the Punjab National Bank, this is the biggest corporate fraud that has taken place in India.

Anupriya Bahadur 0:50
It was now clear that all that clutter was just keeping the glare away from Web of dummy companies, fraudulent documents and a scam bigger than ever seen before. From fugitives to failed kidnappings to a blame game and a potential asylum. The story has more twists and turns than latest Friday release. This is the story of Nirav Modi. We get you the investigative insights

BG 1:13
you know Nirav Modi was actually investigated by other agencies. Also, though he was been told by the Income Tax department and the DRI. That information wasn't shared with the other agencies,

Anupriya Bahadur 1:24
the behind the scenes buzz of bankers,

BG 1:26
you all missed the first sign of it. It all happened in one branch by one person remained unnoticed. He was on the same desk for seven years and doing the same work. He was due for transfer twice. And mysteriously both the times there was somebody in the bank who stopped it.

Anupriya Bahadur 1:47
And what could really happen next with Nirav Modi, is he really coming home? Or is there a twist again

BG 1:53
Nirav Modi is very likely to have applied for asylum Nirav selected. Fitzgerald in the appeal. Part of his case is known as the devil's advocate. He's actually considered to be one of the best extradition barristers.

Anupriya Bahadur 2:14
It's Tuesday, November 15. I'm your host Anupriya and you're listening to the story of Nirav Modi, the fraud and fallen diamond magnet on the morning brief brought to you by the economic times.

BG 2:32
While we first head to London where all the action has been not just the last week but over the last six years between Vijay Mallya to now Nirav Modi, Naomi Canton journalist from the United Kingdom who has been reporting all the happenings for Times of India joins us now to give us the real picture and answer some tough questions is neither really coming back home, or are they loopholes left? Naomi, thank you for joining us here on the morning proof.

Naomi Canton 2:55
Oh, hello, thank you very much for having me.

Anupriya Bahadur 2:57
Naomi Nirav Modi's extradition has been held by the higher court in London in a remote order. Before we tackle what next take us through what the judgment really said.

Naomi Canton 3:06
Yes. So the judgment came on Wednesday in the administrative court of the high court told us that it was going to be a remote hand down, which means that you have to just contact the court and request the judgment to be emailed to you. It was obviously a very lengthy judgment by two high court judges. And they had listened to Nirav's barrister, predominantly arguing why the district judge in Westminster Magistrates Court had made a mistake in ordering his extradition. And that in fact, that should be overturned. And Edward Fitzgerald Casey, the barrister for Nirav, he was actually only allowed to argue on two topics. One was the the fact that Nirav could suffer torture and inhuman and degrading treatment in Arthur, a jail in Mumbai, and the other one was called Section 91, which is that it would be oppressive or unjust to extradite him. And what the barrister did was said that that was because he was depressed and suicidal, and therefore it would be very oppressive to send him to India. But the judges in their judgment went into great depth and detail about this. And their judgment was focused mainly on the argument about suicide, risk and depression. And they agreed he was depressed and suicidal and had had suicidal thoughts. But they didn't feel the suicidal thoughts were severe. And they found his depression to be moderate. So they didn't find him to have a severe depression. And he didn't have psychotic symptoms, they said, and those that combined meant that he didn't quite reach the threshold needed to be judged that your mental condition is such that it would be oppressive to extradite you because there's there's a particular threshold you have to meet. And it's actually based on case law, and it's called the turn of Proposition

Naomi Canton 5:00
So that was the finding. Another key element of the judgment was that they were really happy with the assurances given by the government of India, which were very detailed assurances about the kind of medical treatment he can access from Athur road jail, including private treatment. And because of that those assurances offset the risks of him committing suicide, although they admitted that you can never guarantee you can prevent someone committing suicide, but that the assurances Did you know the best possible job of doing that?

Anupriya Bahadur 5:30
I'm going to come and talk about a little bit more about the barrister that when defending Nirav Modi as well now mean in a bit. But I want to draw a comparison on this whole depression route, suicidal thoughts. It's something that has been used before to ward off extradition by high profile cases, as was in the case of Assange Jews as well.

Naomi Canton 5:50
Yes, that's right. So this was the exact argument Assange Jews and ironically, he had the same barrister, Edward Fitzgerald. In fact, I don't know how familiar people in India are with the Shrien Diwani case, he was that British Indian who was accused of murdering his wife was their honeymoon in South Africa. And then he went into a mental institution. So both Shrien Diwani and Julian Assange both managed to get their extradition rejected on the grounds that they were heavily depressed and likely to commit suicide. So it has been used. And that's obviously why the barrister was, was going down that route with Nirav Modi. And it was, you know, throughout the case, from the very outset, this idea of him being depressed was brought up again and again. And then the depression got worse and worse and exacerbated by locked down and the COVID pandemic. And then sort of towards the end, you know, he was heavily depressed and had been considering suicide. And that was the way the case progressed. But it didn't persuade the judges. And I did speak to a barrister about this. And he reckoned that one of the key factors is the assurances by the government of India, because he was telling me that one of the problems with Assange and Diwani were that the judges were not satisfied with the assurances from the USA and South Africa.

Anupriya Bahadur 7:04
So I want to now come to the barrister in question that Mr. Fitzgerald, he's got a key nickname as well. Now, what can you tell us because there are a lot of common clients across the board from the lot that have been asked for extradition from the Indian government.

Naomi Canton 7:18
Yeah, he's actually considered to be one of the best extradition barristers in Britain. He's known as the devil's advocate. And he has an under very good reputation for himself because he has acted in some very high profile cases he acted in Lawrie Love's case the computer hacker that the US was seeking to extradite. And he got that extradition completely stopped. He also represented Jabir Motiwala, who was said to be the CEO of the D company in Pakistan, and he had actually been caught in sting operation by the FBI trying to sell drugs to these FBI agents. So there was considerable evidence against him. But in that case, Edward Fitzgerald managed to get the extradition request withdrawn, and Jabir Motiwala went back to Pakistan a free man. And in fact, Neeraj selected Fitzgerald in the appeal part of his case, and he had actually used Claire Montgomery in the Westminster Magistrates Court, which was the same barrister that Vijay Mallya had used and he obviously, as you know, Vijay, Mallya lost all his cases, so Nirav on appeal decided to switch to Fitzgerald,

Anupriya Bahadur 8:23
which gets us to the next question. Now me what is the road ahead? Is it a sure short homecoming for Nirav Modi or does he have any other routes at this point to appeal this?

Naomi Canton 8:34
Yeah, it's very interesting. He's going to go down the same direction that Vijay Mallya did, because obviously the same happened to Vijay Mallya, he lost his appeal in the High Court. So the next step is to get a point of law of public importance certified by the High Court that there is such a point of law of public importance in his case, and his barrister may well use the turn of proposition for that, and then he has to get leave to appeal in the Supreme Court. That means permission to appeal and he can apply for permission in the high court or in the Supreme Court to get that. But if he doesn't get this public point of law of public importance certified, then, in fact, that's the end of the road because the Supreme Court cannot hear his case. So that's gonna be his first step. And then the next thing he can try if he fails at that is to get an injunction from the European Court of Human Rights, which is known as a rule 39. And that would be him saying to them that there's an immediate risk of threat to his life or health in this jail in India, and they have to stop his extradition immediately. And that's something that Sanjeev Chawla tried before he got extradited to India, but his was rejected. And most of these requests are rejected, though a small number get through. So that would be his next step. And then, if that failed, he would actually have to get extradited within twenty

Naomi Canton 10:00
The eight days. However, in Vijay Mallya's case, it did fail. Although Vijay Mallya didn't apply for a rule 39 He only tried the Supreme Court. He in Vijay Mallya's case he didn't get the point of law of public importance certified. So then we were expecting him to be extradited within 28 days of that decision. And in fact, he hasn't gone back.

Anupriya Bahadur 10:21
So which brings me to the point Naomi about asylum. As Nirav Modi, applied for asylum, would we know if he'd already applied for asylum? Are those applications public because we're not very clear on how these rules work in the United Kingdom, because for Vijay Mallya, as well, it was only after his extradition orders were put through that we realized that he put in for an asylum application already.

Anupriya Bahadur 10:42
Yeah, the interesting thing is that the asylum application, even the Indian government wouldn't know about it. That so in fact, it's very secret, and the reporters wouldn't know about it. It's not public. And these are private hearings that happen under different tribunal all together. I think it's the immigration and asylum tribunal, and they have their own judges and it's closed court. It's not open to the public. Even the judgments are private, they're not disclosed. So if somebody applies for asylum, but no one knows about it, and if they get the asylum, no one knows about it either. So the Indian High Commission wouldn't know about it. What we do know is that every time we've inquired about it, we've been told that Vijay Mallya hasn't gone back for legal reasons. And if I've tried to get asked more about that barrister I spoke to said it's likely to be either asylum or it could be the civil cases that he's got going in the UK, because he's got quite a few civil cases like his bankruptcy appeal and cases like that. It could be this because of those that hasn't gone back. So we're not exactly sure why Vijay Mallya hasn't gone back. Nirav Modi is very likely to have applied for asylum, I would say, and he may have applied already, you wouldn't necessarily wait till the final judgment comes and then put in your asylum application. You would probably have done it already like that during the process after your initial extradition court hearing or something. But the asylum application can take years because there's lots of different layers of appeal. So it can drag on for quite some time. And if Vijay Mallya has applied, he could still be in the process. We don't know whether a decision would yet have been reached in his case.

Anupriya Bahadur 12:20
Naomi I just want you to draw the comparisons and how these cases are very different. You know, the illustrious Bad Boy billionaire Vijay Mallya, which you would have had the opportunity to see him go in and out of court, but in Nirav Modi's case been in jail, and then there was COVID. So there was video links and the case was quite behind the scenes. Compare the two cases for us.

Naomi Canton 12:39
Well, Vijay Mallya was great fun to cover as a journalist, because he always turned up in a chauffeur driven car with his girlfriend, the one who had been an air hostess with Kingfisher Airlines. And they would always come together, sometimes his son would come, and he sort of turned up with shades on and you know, dress like a model. And he'd always have a little entourage of people carrying things for him. And he'd always sort of stand outside court and get his cigar out and his posh, lighter and sort of strike his cigar. And then we'd all surround him and then he'd start giving us little sound bites and at lunch, Vijay, Mallya, it was very odd, actually, because he always used to go outside at lunch. And then of course, all the media would rush outside, and then he'd be able to give a statement. So I think he actually quite enjoyed the publicity. And then at the end of the case, it would be exactly the same. So you know, it was always high drama and great fun. Nirav Modi, as you probably recall, he was actually found by The Daily Telegraph wearing that Oxbridge high jacket, sort of wandering through the streets near Oxford Street. And they tried to interview him, and he just kept saying, No comments, and there's a video of it, and then he flagged down a taxi. You please just confirm whether you've applied for political asylum. That's all I want to know.

BG 13:54
Can you confirm that?

Nirav Modi 13:56
Sorry, no comment?

Naomi Canton 13:59
Well, it was about a week or two after that, that he got arrested, opening a bank account in Metro Bank. And then he's been in custody since that moment, he was then brought to court the next day for his preliminary hearing. And they get asked, Do you want to be extradited to India or not? And then they say no, and then it becomes an extradition hearing. And then he got taken to ones with jail. So He then used to come in person from the jail. So he'd come in a prison van, and then come up to the dock and stand there. I remember his first few hearings, he was really smartly dressed. He's looked like the same guy, you know, like the diamond dealer that hangs out with celebrities. And then I think, obviously, because of COVID. It then became video links. And then he's only ever come on video links since then from prison. So we just sort of see him on video in the court and he sits there with all his papers, but over time, and as they started to talk about this depression, that he had sort of grew a beard and he started to look much more disheveled and he put on weight as well. He'd

Naomi Canton 14:59
didn't look same as the initial Nirav that used to come in person. And then they said he was taking antidepressants and things. This was when he'd been living in this swanky apartment, just Oxford Street, which was where he was living when he was running this jewelry business called Diamond holdings. Now remember, there was this moment when the barrister spoke about him having a dog. And it was one of the reasons why he should get bailed, you know, and I remember he looked really upset when this dog got mentioned.

Anupriya Bahadur 15:26
Naomi while we have you, I want to clarify something. There's a lot of speculation bars around the new trade deal that's being signed between India and the UK. Will extradition be part of that trade deal? Will it be incorporated in some way? What are you picking up? Because I understand that you do have some clarity on that?

Naomi Canton 15:44
Yes, I have checked this out because it's often said on Twitter and elsewhere in social media that, you know, if the UK extradite Vijay Mallya and Nirav Modi, then Prime Minister Modi will sign the trade deal within seconds. And that's just speculation on social media. It's not anything that is a fact. And when I checked it out, I was told that there was just no correlation at all the these extradition cases have no connection to the trade deal. They're not influencing the trade deal. And the trade deal has nothing to do with these two cases. And that's that came from the Indian government. So I think that probably, you know, is the truth, because it would be very odd if a single person was sort of held to ransom over this trade deal. And of course, in the UK, these cases are all going through the UK courts. So again, when the Indian public criticize the UK government for not extraditing these people, it's actually not the UK government that's making the decision. It's the judges and the court system. And we have a separation of powers. And our our judiciary is separate to the government that so it does a lot of people try and bring it into the political sphere. But in fact, it's literally just going through our court system.

Anupriya Bahadur 16:58
And that settle's the speculation on the trade deal. But this case and the drama in this case, Nirav Modi far from over. Thank you, Naomi, for joining us here in the morning brief and I'm sure we'll catch up with you soon as more twists and turns appear.

Naomi Canton 17:10
Thank you. It's lovely chatting to you.

Anupriya Bahadur 17:12
Well, that was now and what could happen next. But where did it all start? We take your rewind to bring you back the full story of Nirav Modi.

Anupriya Bahadur 17:26
I recall that it was Valentine's Day 2018 and red was flashing all over the screens as India's second largest bank, Punjab National Bank PNB on earth what would be the biggest scam faced by an Indian bank yet 11,000 crores and counting with the main cast featuring fugitive mama Bhanja duo Nirav Modi and Mehul Choksi. What followed was complete pandemonium from billionaires on the run to a blame game between the RBI and the center, and bankers scrambling to assess the full extent of the hit and investigative agencies jumping into action, but after the key accuse had already taken off, and as many a way to potential return of Nirav Modi. The Economic Times team gets to the ringside view of the scam. Joining us Sangita Mehta buzzing with everything to do with banking, and Rashmi Rajput was a hawk sigh when it comes to investigations. Welcome, ladies.

Rashmi Rajput 18:17
Thank you so much. Anupriya. Thank you for having me.

Anupriya Bahadur 18:21
Sangita, let's start with you. For the rest of us. It was a big day of disclosure on Valentine's Day. But behind the scenes, I'm sure it was a classically hectic breaking news day for the reporters. Tell us how it really all played out?

Sangita Mehta 18:33
Yeah. PNB announced about it first thing in the morning when the exchange open. But it was quite a noisy day, because we were just trying to figure out what is this all about? Like what is an LOU. And we've never really looked into how LOU could be a scam and you know, the sheer magnitude of the fraud, it was 1.7 7 billion which in today's time it will be roughly 14,000 Crore back then it was 11,300 crore. But then it was these things which really caught us and we were calling banks to understand where, you know, where is this taking us and things like that. But we all missed the first sign of it. This was evolving, and it was happening behind the same but we never realized because on Fifth of Feb, the bank gave a very innocuous notice to the exchange that it's suspected of fraud of 280crore at one of its branch. That's it. And then the second line was even more interesting. It said that the fraud is reported to the regulatory agency and investigative authorities. So they didn't mention anything about FIR or the CBI involved or any such thing. It's only in hindsight, we know that, you know, it was detected there at least a month ahead of 14th of Feb. And you know, in those days, I used to put a Brady house branch very regularly. I knew a lot of people out there so personally for me, it was quite a shock that these are the people whom I used to regularly interact and things like that. And the other side these banks were all blaming PNB

Sangita Mehta 20:00
PNB itself was kind of, you know, trying to water down the whole thing that oh, we have recall the loan from Nirav Modi, everything is going to be okay. And by the end, Nirav Modi had already left the country Nirav Modi and Mehul Choksi, both of them now.

Anupriya Bahadur 20:15
Right, and we'll get to that timeline of how the accused were actually tipped off much before the agencies were, which gets me to you Rashmi now, what did the investigative agencies do next

Rashmi Rajput 20:26
29th of January is when PNB are registered its official complaint with the CBI. And that time around it had pegged the scam to around 280 crores because the amount of LOU's that time issued or whatever they could find was amounting to 280 Crores, I'll just tell you one interesting anecdote, you know, around LOU's. And what happened is during the course of the investigation, the CBI went to raid, they figured out that most of these LOU's, which were original LOU's signed by Gokulnath Shetty, which was one of the accused in the case that they were stacked at, in the office of a very leading law firm in Mumbai. So the CBI had got this information, they wanted to act on it fast, because they thought that you know, this was very important is crucial piece of evidence. So when they went there, they were no LOU's to be found, because he had already moved because somebody had already informed the law firm. And one of the accused was arrested by the CBI. He subsequently had during the recording of the statement said that he actually had got three to four tempos outside that law firm and move that with those LOU's from that law firm to a small room,in Zaveri Bazar, so subsequently the CBI went and raided it and then they found those original LOU's which was stack in a small room of around like 200 square feet. So think about it Anupriya you had a scam of amounting to 14,000 crore, which is actually all the documents the main evidence was in a room which is less than 200 square feet. So, this is one of those, you know, interesting anecdotes of the investigation. What was very important for both the CBI first complaint was registered by this PNB on the 29th of January, the CBI in a day or two's time, they registered in a FIR, and subsequently the enforcement directorate stepped in, and they registered a money laundering offense. And then you had both the CBI and the ED probing the case of probing both these the nephew Uncle duo and initially the scam which the PNB bank had said was around 280 crores it has now ballooned and it is now around more than 23,000 crores

Anupriya Bahadur 22:32
rather large difference between the initial estimate of the fraud and what it actually came out to be Sangita take us through the nature of the fraud because that is critical in understanding how this actually all transpired.

Sangita Mehta 22:44
So, basically PNB issued a letter of undertaking to this mama Bhanja, that is Nirav and, Mehul Choksi's companies, what is a LOU LOU is like an implicit guarantee that if companies of Nirav Modi and Mehul Choksi doesn't pay an I as PNB take the responsibility to make good the difference or whatever is the gap. Now, this Nirav Modi's company takes this letter goes to the Hong Kong branch of Union Bank. So already the money siphoned out of India when he goes to Union Bank right in Hong Kong. And he tells them that transfer this 100 million to my ex company, which is probably his own personal account, and now he gives an instruction to transfer it to some third account. So what happens is the money moves from PNB, India, to Hong Kong branch of Union Bank, and from the Union Bank, Hong Kong branch, it moves to his personal account. Union Bank is paying this money to Nirav Modi, because it's backed by LOU, which says that, you know, if there's a default to PNB will pay pnbs government owned bank Union Bank, government owned bank, they both will trust each other and this thing goes on. So Union Bank then makes a claim to PNB that you know Nirav Modi has raised this money from us so you kind of make good the difference or make good that money. So PNB then credits 100 million to Union Bank. And you know, the RBI rules are very clear. If there's a LOU which is backed by a bank, another Indian bank has to honor it. And it won't believe PNB issued loi of 293 293 LOI's were issued by PNB. In this entire eight years, you know the cycle of 177 billion, and it remained unnoticed. I mean, it all happened in one branch by one person remained unnoticed.

Anupriya Bahadur 24:46
So Sangita. This is one person that we're talking about the primary person responsible at the desk at PNB. It's quite amazing how much power and how consistently he wasn't just this desk to be able to execute all of these LOU's for Nirav Modi and Mehul Choksy's company

Sangita Mehta 25:01
yeah and and you know, even more surprising was that he was on the same desk for seven years and doing the same work you know in a bank the policy is that every three years you will have to be transferred at least be transferred out of city or you know on a different bank branch kind of thing. But in this seven years he was due for transferred twice and mysterious they both the times to somebody in the bank who stopped it

Sangita Mehta 25:29
that still remains a mystery that how did that happen? That after this episode, where Gokulnath Shetty remain in the branch, there was a policy initiative that you know, no person in any bank in any branch be it private PSU, whatever, can be there for more than three years.

BG 25:49
So Sangita, there are large amounts, multiple LOU's being signed off from a single desk, no reconciliation and no red flags, where did the tide turn for the branch to realize something was wrong.

Sangita Mehta 26:03
That is very interesting. So what happened is, as I said, it was all done by one person, his name was Gokulnath Shetty. And he was a very junior person, Deputy Manager, you know clerical level. So he issued these letters, kind of he would roll roll over these letters of LOU. Till such time he retired in December 2018. And once he retired, the new person came, the new stuff was deputed in his place. By then, in the month of December, he had already issued some LOU's to Nirav Modi and Mehul Choksi companies. Now those LOU's had already reached the Hong Kong Dubai, London branches of Indian banks. And those branches came back to PNB in the month of January, making a claim for that amount. When they came, the new staff said that I'm not authorized to give you because these LOU's are not backed by securities. And there is some mismatch. He raised this issue with his senior. And then in the mid of January, the entire Brady bra house branch staff realized that there is a discrepancy in this entire thing. And that's how the whole chain broke. So even as PNB discovers it comes to the investigative agencies, it's all too late. Because as the playbook learned, even during the previous cases, even such as Mallya, they had made the getaways before the agencies even came along. In fact, Rashmi there was some stark revelations about how early these exits were planned by the likes of Nirav Modi and Mehul Choksi, who in fact, already had a citizenship of another country.

Rashmi Rajput 27:43
Exactly, exactly. In this case, also in Autopia, they had planned escape well in advance if our sources are to be believed this happened in around April of 2017 itself. Now, what these people tell us is that around that time is when Gokulnath Shetty had, for the first time told both Nirav Modi and Mehul Choksi that, you know, he's going to retire in January 2018. And the new staff that would be taking over they might not be that cooperative with him and with them and they might not be able to carry forward issuing the fraudulant LOU's. So that is when both of them decided that this was going to be an end of their dream grant. So in around June of that year, Nirav Modi had already shifted his kids to to the US. And on first January when Gokulnath Shetty retired on the same day, both Nirav Modi, his wife and his brother in law, they left the country and five days later your Mehul Choksi leaving the country. So they had actually planned their escape well in advance before the PNB bank could go and even register a case and what the CBI had also found out that, you know, in the month of November, two of its executives, two of the officials who later both agencies managed to bring them back, they had also escaped. So you know, all this was happening in 2017. And then it was only in 2018 when their huge explosion happened when PNB finally figured out that you know, there was this massive scam that was happening at that Daddy house, a batch of dads and but it was a little too late for them.

Anupriya Bahadur 29:19
Rashmi, you mentioned about Nirav Modi's, his wife and brother in law but the other interesting character in this entire plot was Mehul Choksi, who as we mentioned had already taken a valid citizenship and moved to another country. When according to the investigative agencies, Rashmi does Mehul Choksi fit into this entire scheme of fraud.

Rashmi Rajput 29:38
Now he is actually responsible for more than 50% of the scam. So you have around 6500 Crore which was back towards Nirav Modi and 7000 Odd crores, which was paid towards Mehul Choksi talking about the initial days in May 2018. But the CBI had pegged the scam toaround 13,500 crores the amount attributed to

Rashmi Rajput 29:59
Mehul Choksi is more than that of Nirav Modi. Now, in case of Mehul Choksi what also happened is somewhere in May of 2018, there was this spa between the agencies because Antigua the country came out saying that Mehul Choksi is they have arrested him. And that's when the Indian agencies were trying to figure out how did you manage to get the citizenship? So then you had a spa that happened between the mea and the Mumbai police, where the mea was saying that the Mumbai police gave him some T colors. The PCC which is the verification the police verification certificate based on which the Antigua government had issued the citizenship to him. And the Mumbai police said that, you know, when we had done a verification 2017 There was no case against him. So how can we not give him a clearance certificate? So there was this so many things that were happening. And they figured out that actually he was he had done this all this activity of getting the citizenship happened in 2017. itself, and he managed to do it. So Mehul Choksi a he got the citizenship and then later subsequently he claims now that there was an attempt by the government to kidnap him.

Sangita Mehta 31:08
That's what I want to come to you.

Sangita Mehta 31:11
A lot of our listeners, you don't want to really know because we've read about it. Mehul Choksi after ages came back on air to talk about being distressed. So what can you tell us about the very famous point kidnapping Rashmi?

Rashmi Rajput 31:25
Okay, the allegation that Mehul Choksi had leveled was that he was kidnapped by the Indian government. And that, you know, there were these attempts to bring him back, the government was trying to make him or take him back to India. Now, those are allegations right, or we won't be able to substantiate whether that really happened and whether that was an failed attempt by the Indian agencies, but he has registered a case of claiming that he was kidnapped by the Indian agencies. So, that is where it stands officially. But if you see in the case itself, there are a lot of intriguing factors, because he went missing, then his wife registered a complaint and then he was found in another country Dominica. And then subsequently, Dominica also dropped the charges against him. And now he plans to even register a case of kidnapping. So it is the it's very interesting about how things work in the Caribbean island.

Anupriya Bahadur 32:22
So now, by this point, the main cast and crew of the scam have moved overseas Sangita This brought about a big back and forth between the center and the gatekeeper of the banks, the RBI I recalled from the late Arun Jaitley to then very suddenly vocal Urjit Patel as well.

Sangita Mehta 32:39
Yeah. So, basically, the question was, who will foot the bill nine it was a huge amount of 12,000 Crore that had to be provided otherwise, the bank will collapse finance ministry kind of raise this issue that you know, the RBI was a gatekeeper, as you correctly said that they didn't kind of regulate banks properly. And then I have this like, you know, very interesting comment, which I just wanted to read out from a speech that Arun Jaitley made back then, that he said that we must always remember the regulators have a very important function, they ultimately decide the rules of the game and they must be the third eye, but unfortunately in Indian system, it is we politicians who are accountable and not the regulators. Now, this was a very very provocative statement from our Arun Jaitley. And then will it was very natural that Urjit Patel will retort Na And then he gave his famous speech that success has many fathers, but failures have none. I mean, if you recollect, when he said that the RBI should be given powers to regulate PSU banks as regulate private banks. And of course, then six months later, he he resigned as you want to collect the sample, Urjit Patel

Sangita Mehta 33:57
put in his papers.

Anupriya Bahadur 33:58
But Rashmi as the fingers are being pointed between the centre and the RBI, there's also much to be said, between what was happening the investigative agencies, and 2017 as early as 2017 Nirav, Modi was already being probed by the Income Tax department. And yet the asymmetrical information between agencies is what aided the release or the movement of the likes of Nirav Modi and Mehul Choksi. Share with us what was happening behind the scenes and also kind of the moments that have stuck with you as you've covered this massive case.

Rashmi Rajput 34:31
Never a lot of interesting, I'd say so to say milestone kind of while you cover the case. You know Nirav Modi was actually investigated by other agencies also, Income Tax department was investigating him the DRI was investigating him. I remember when he used to go to the DRI office. He use carry his mineral water and he was very particular about drinking only that particular brand of water and he was very well dressed you know

Rashmi Rajput 35:00
It was very difficult to say that this person is later going to become the face of white collar offense in India, though he was being probed by the Income Tax department and the DRI, that information wasn't shared with the other agencies. So what actually the Nirav Modi case did was that, you know, it has brought many of the agencies together. So now you have a lot of coordination that happened between the agencies.

Anupriya Bahadur 35:25
Sangita Rashmi says that the agencies have learned a lesson and have been better at sharing information. But Has anything changed on the regulation and supervision part when it comes to PSU banks and bankers in general? Have things changed on the ground? Or are we still susceptible to hear headlines like this, once again,

Sangita Mehta 35:42
this particular thing, gap is more or less bridged core banking is linked to Swift, and that is a regular risk based provision, which is an online and the RBI has started the Skrillex system where each bank has access to how much exposure other banks in the system has to a particular company. But it's not fully watertight as yet, because RBI still doesn't have that kind of regulatory powers. RBI cannot supersede the board of PSU RBI cannot have been removed the MD of a bank, no PSU bank, he can't even say that you know, that this person is not fit to run the PSU bank. But point is that we have improved but there is a lot of room yet. A lot of room to get better. Well, on that note, thank you so much. Sangita and Rashmi for your time. And I'm sure this case is far from over, as they say a picture abhi baki hain so more twists and turns still expected. In the Nirav Modi saga.

Nirav Modi 36:41
I always will have sleepless nights, but we will move forward.

Anupriya Bahadur 36:47
That was Nirav Modi over six years ago talking to the BBC about having sleepless nights over massive expansion. And I'm sure he continues to have sleepless nights but for very different reasons. The scam expose cracks in information shared in supervision and also disclosures. But as Naomi pointed out, it may be too early to plan a homecoming for the flawed and fallen time magnet near a smoothie. With that I have host Anupriya I'm signing off on this edition of the morning brief brought to you by the economic times.

Anupriya Bahadur 37:18
A big thanks to the team that helped put this together our producer, Sumit Pande sound engineer Indranil Bhattacharjee and a special shout out to the team at BCS ragasur for the rocking signature tune we debut today. Executive producers for TMP Anirban Chowdhury Arijit Barman and yours truly do follow us to get notified when our episode drops next, which is every week Tuesday, Thursday and Friday. It promises to be an action packed week ahead. Thank you for tuning in.

​This transcript has been automatically generated. If by any chance there is an error please send the details for a correction to: themorningbrief@timesgroup.com We will do our best to make the amendment as soon as possible.​