Mehul Choksi and the ₹14,000 Crore Scam: A Fugitive’s Trail of Fraud, Legal Loopholes, and International Drama

Mehul Choksi, a high-profile Indian jeweler and maternal uncle of Nirav Modi, has emerged as a key figure in one of the biggest financial scandals in India’s banking history. Both Choksi and Modi stand accused of orchestrating a massive ₹14,000 crore fraud against Punjab National Bank (PNB), leveraging unauthorized Letters of Undertaking (LOUs) to obtain credit abroad. Choksi fled the country in early 2018 and has since been entangled in legal proceedings across various international jurisdictions.

Unraveling the PNB Scam

In 2018, PNB uncovered a series of unauthorized LOUs issued by bank officials in collusion with Choksi’s firm, Gitanjali Gems Ltd. These LOUs enabled Choksi to secure overseas credit without the required collateral or documentation, resulting in enormous financial losses for the bank. Following the discovery, the Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) launched parallel investigations under the Indian Penal Code and the Prevention of Money Laundering Act (PMLA). Choksi now faces multiple charges, including money laundering, cheating, and criminal conspiracy.

Slow Progress in Legal Proceedings

While Nirav Modi was declared a “fugitive economic offender” in December 2019, Choksi’s legal proceedings have seen several delays. The Bombay High Court stayed the plea to grant him the same designation, citing procedural complications and pending legal applications. To date, no charges have been formally framed in court, and the trial against him is yet to begin.

A Surge of Fresh FIRs

In a significant development in December 2022, the CBI registered three fresh FIRs against Choksi, implicating him in additional cases of financial fraud:

• Gitanjali Gems Ltd: Alleged ₹5,564.54 crore fraud involving a consortium of 28 banks, led by ICICI Bank.

• Nakshatra Brands Ltd: Alleged ₹807 crore scam in coordination with nine banks headed by PNB.

• Gili India Ltd: Alleged ₹375 crore fraud also involving PNB.

These FIRs underscore the wide-ranging scale of the alleged deceit, implicating multiple corporate entities and financial institutions.

Enforcement Directorate and SEBI Crackdown

The ED has aggressively pursued asset recovery from Choksi. In 2020 alone, assets worth ₹2,550 crore were attached. Separately, the Securities and Exchange Board of India (SEBI) fined Choksi ₹5 crore for fraudulent trading linked to Gitanjali Gems. When he failed to pay, SEBI issued a demand notice totaling ₹5.35 crore, inclusive of interest and penalty costs—warning of asset seizure or arrest should the payment remain pending.

Extradition Roadblocks and International Asylum

Ahead of the scandal’s exposure, Choksi secured Antiguan and Barbudan citizenship in 2017, raising suspicions about his intentions. In May 2021, he was detained in Dominica for allegedly entering the country illegally. After a protracted legal battle, he was released on bail and returned to Antigua and Barbuda. India’s efforts to extradite him have so far been thwarted by legal complexities and diplomatic hurdles. As of now, he remains a free man in Antigua, despite the serious charges awaiting him in India.

The Mehul Choksi saga brings to light the urgent need for improved financial oversight, stronger regulatory mechanisms, and more effective international cooperation in white-collar crime cases. Although investigations and asset recovery efforts are ongoing, Choksi’s continued evasion reflects the many loopholes in cross-border legal enforcement. As Indian authorities persist with legal action, the broader goal remains the same: accountability, justice, and reform in the financial system.

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