PMO alerted about Rs 9800-crore in dodgy loans to Mehul Choksi in 2016, claims businessman

Last Updated: Fri, Feb 16, 2018 18:22 hrs
Modi Choksi Nirav

The Rs 11400 crore PNB scam brings big questions to the fore.

Firstly, for the banking industry, which keeps boasting how risk averse it is - thanks to robust internal protocols and risk management practices. 

Secondly, how a scam as large as $1.77 billion (Rs 11400 crore) could have been pulled off without any alarm bells ringing.

Thirdly, how a lowly deputy manager could be the central figure in the scam at Punjab and National Bank.

The fourth and newly emerging question is the repercussions it could have for the central government. More so since the election season is ahead and the ruling party has always been keen on projecting itself as a taint-free party.

It is in this backdrop that the Prime Minister's Office's (PMO's) perceived failure to treat a complaint seriously might come back to haunt the BJP and possibly Narendra Modi too.

The PMO's office, prima facie from reports, seemed to have been alerted of bad loans to the tune of "Rs 9800-crore plus on meagre assets of Rs 25-30 crores" to Mehul Choksi as early as 2016 by a businessman Hari Prasad, who claimed to have been cheated by Nirav Modi and Mehul Choksi.

The Moneycontrol website published copies of Hari Prasad's letters, where he claimed that there were a list of 31 banks who had advanced these dodgy loans. In his letter, Prasad warned that Gitanjali Gems was set to become a Non-Performing Asset soon and was also guilty of avoiding any Income Tax payments since 2006. He wanted his allegations investigated and as promptly as possible.

"The letter was forwarded to RoC (Registrar of Companies) Maharashtra (by the PMO) marking me a copy on July 29, 2016 but no action was taken," Prasad told the website.

The mail he sent to RoC, Maharashtra, as published on Moneycontrol:

The mail he sent to the PMO's office:

This story came after an earlier report in Asia Times, which quoted Prasad as saying he began his investigations after the disappointment he faced after investing nearly Rs 100 million in a jewellery franchisee business with Gitanjali Gems in 2012. Gitanjali Gems was expected to underwrite investments with materials worth Rs 250 million. But there was no progress for about a year.

An exasperated Prasad finally filed an FIR with Bengaluru police, but to no avail. He also sent complaints sent to the Central Bureau of Investigation (CBI). Again, his efforts went unrewarded. But he did not give up.

Prasad studied the balance sheets of Modi and Choksi and concluded it was a massive Ponzi scheme.

It was after this that he wrote letters to the PMO, which further forwarded the complaint to the Registrar of Companies (RoC), Maharasthra as reported earlier.

"Having lost my faith in the system I gave up my initiative to alert the authorities about the possible scam," he told moneycontrol, also telling the website that he feared for his life now that his letters have gone public.

The Modi-Modi photo at Davos

Meanwhile, Asia Times' Saikat Datta, who originally spoke to Hari Prasad, also spoke to two diplomats to test if Law Minister Ravi Shankar Prasad's claim that the presence of Nirav Modi in the photo-op with Prime Minister Narendra Modi at Davos was only a coincidence.

"As per protocol, it is impossible for anyone to participate in a photo-op with the Prime Minister without previous clearance and sanction,” a former Secretary-rank diplomat who insisted on remaining anonymous told Datta. "The picture was arranged and there are other pictures, which shows the chairs were lined up for this group picture. These other pictures also show the Prime Minister shaking hands with the CEOs, which makes it an official function. Under no circumstances could this have been a coincidence."

This is the controversial photo:

Here are a few thoughts on the scam shared on twitter:

Also Read:

Namo! Nimo! and the Rs 11400 crore hoodwink - A Davos Talkies production

Clear criminal connivance of Nirav Modi and Gitanjali Gems in Rs 11000 crore scam, says PNB in letter to banks

I screamed in court against Choksi and Gitanjali Gems, but nobody heard me back then: cheated franchisee

Nirav Modi fraud: Jewellers apprehend impact on credit flow to industry

PNB capable of taking entire hit of Rs. 11,300 crore: Fin Min sources

CBI registers FIR against Gitanjali group in $ 1.8 billion fraud case

PNB should reveal due diligence on Rs. 1700 crore loan to Nirav Modi: AIBEA

Government suspends Nirav Modi, Mehul Choksi's passports

More from Sify: