Thu. Mar 28th, 2024

Around 2015 , Nirav Modi was being investigated by the Directorate of Revenue Intelligence for allegedly diverting imported , duty-free , cut and polished diamonds and pearls to the domestic market.

According to a reporter  the few Indian banks that were lending to him had begun demanding fixed assets as collateral—an unusual practice in the diamond financing business , which largely relies on current assets such as trade receivables .

“The business looked great on paper , but the due diligence threw up several unanswered questions about his operations. The report , which was based on interviews of former employees of Modi’s companies , revealed serious concerns around round-tripping and possible fraudulent transactions involving shell companies ,” said the second person briefed on the matter.

DRI claimed to have found cut and polished diamonds worth Rs100 crore in stock at the factories , against a declared stock of Rs1,100 crore.

Similarly , the total value of pearls in stock was worth Rs4 crore , instead of the declared stock of over Rs100 crore. “The evidence pointed to hugely inflated books of accounts , possibly to secure fresh loans on the basis of the dressed-up numbers ,” said a second person , who was also part of the investigating team.

What also set the alarm bells ringing was why none of Nirav Modi’s firms were a “sight holder” on the De Beers Global Sightholder Sales’ list of authorized bulk purchasers of rough diamonds.