The fraud allegations against Gitanjali Group and its founder, Mehul Choksi, appear to have discombobulated the Indian diamond giant: At press time, its website has gone offline, three executives have resigned, and Choksi’s current whereabouts remain unknown.
Gitanjali owns the Samuels retail chain in the United States, as well as U.S. wholesale companies Diamlink and Jewelry Marketing Company.
On Feb. 15, India’s Central Bureau of Investigation filed a First Information Report (FIR) against Gitanjali Group and several of its top executives, charging them with cheating Punjab National Bank out of $754 million by having bank officials issue fraudulent Letters of Undertaking (LOUs).
A Gitanjali stock exchange filing called the charges “baseless,” noting that “neither the audit committee [nor] the management of Company came across any such fraudulent activity nor was anything found amiss.”
Regardless, news and escalating allegations continue to swirl against the beleaguered company:
– The income tax department has raided 20 premises linked to Choksi and associated firms in connection with a tax evasion case, according to Livemint.
– The company’s chief financial officer Chandrakant Karkar; vice president and company secretary Pankhuri Warage; and independent director Krishnan S. Waran have all resigned. While Karkar cited his wife’s health, Warage wrote that “my conscience doesn’t permit me to continue with my position.”
– In a possibly damaging revelation, the company’s former managing director, Santosh Srivastava, has accused his old boss of overvaluing diamonds and passing off lab-grown diamonds as real ones.
– It is not clear where Choksi is right now, although Indian news reports say he has left the country, and his passport has been canceled for four weeks.
Meanwhile, Choksi’s nephew, Nirav Modi, has also reportedly left India, with new reports suggesting he is now in Dubai. Modi has also been charged with defrauding Punjab National Bank.
Modi’s lawyer, Vijay Aggarwal, told Reuters his client was innocent but did not give any information regarding his client’s current whereabouts.
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