Mehul Choksi is a fugitive Indian businessman who, along with his nephew Nirav Modi and several bank employees, orchestrated one of the largest financial scams in Indian history: the ₹13,000 crore Punjab National Bank (PNB) scam. Following an extradition request from Indian officials, the Enforcement Directorate (ED) and the Central Bureau of Investigation (CBI), he was arrested in Belgium.
According to The Economic Times, a Mumbai court issued two non-bailable arrest orders in March 2018 and June 2021, which served as the basis for the 65-year-old’s detention. According to reports, he intended to go to Switzerland for treatment of blood cancer. His lawyer stated after his arrest that they would fight his arrest in Belgium due to his cancer treatment.
Who is Mehul Choksi?
Mehul Choksi is an Indian businessman who has been on the run from Indian authorities since 2018 after committing PNB fraud with Nirav Modi. He founded the now-defunct Gitanjali Group, which had over 4,000 outlets throughout India.
Born on May 5, 1959, in Bombay (now Mumbai), Choksi was educated at Gujarat’s GD Modi College by his father, Chinubhai Choksi. He has two girls and a son.
He started working in the gems and jewellery industry in 1975 and took over Gitanjali Gems from his father in 1985. The business grew under his direction beyond its original emphasis on rough and polished diamonds.
Chetan Chinubhai Choksi, his younger brother, operated the Antwerp, Belgium-based diamond company Diminco NV. Legal action was taken in Belgian and UK commercial courts when Diminco NV failed to pay USD 25.8 million to an ICICI Bank subsidiary in 2013.
What is the Rs 13,000 crore PNB scam, and how did it happen?
When Bengaluru-based businessman Hari Prasad SV wrote to the Prime Minister’s office (PMO) in 2018 about a possible large-scale scam and pointed out balance sheet irregularities, the PNB scandal was exposed.
After that, the ED and CBI charged Mehul Choksi, Nirav Modi, and several PNB executives with conspiring with bank employees to obtain false Letters of Undertaking (LoUs) and manipulate Foreign Letters of Credit (FLCs) without conducting the necessary due diligence. Using these letters, they got loans from foreign banks, which promised that PNB would return the loan to his now-defunct company, Gitanjali Gems.
Nevertheless, loans were made without cash margins or a sanctioned maximum. Typically, banks require a cash deposit or impose a restriction before providing such assurances. Furthermore, no entries were made in PNB’s central banking system, so audits failed to identify it or raise any concerns. The state-run bank suffered a huge financial loss of Rs 6,344 crore.
The whole loan amount must be driven off immediately as fraud is made public, per Reserve Bank of India (RBI) regulations. Simply put, the bank must register the money as a loss and expect it will not receive the money back. As a result, PNB had to book the $2 billion exposure from the LoUs given to Nirav Modi’s group companies as a Non-Performing Asset (NPA). A non-performing asset (NPA) is a loan for which the borrower no longer pays interest or principal.
In 2018, Choksi left India
Choksi and Nirav Modi left the country 2018 before the scam was exposed. After leaving India for the United States, Choksi stayed in Antigua, where he obtained citizenship in 2017. Nirav Modi has been battling his extradition to India since the London Metropolitan Police arrested him a year after their escape. He has used up all his legal defences against extradition but is still being held in the UK.
When Choksi tried to escape to Cuba in 2021, he was arrested in Dominica, and his lawyer made shocking accusations that he had been abducted. Later on, he was sent back to Antigua.
Two years later, Interpol revoked the Red Notice against him, even as Indian authorities wanted extradition. An international police agency called Interpol will issue a Red Notice, which is a worldwide notice. It asks member countries to help locate and arrest a person wanted by another country.
He afterwards travelled to Belgium on the premise of getting cancer treatment, where he now lives with his Belgian citizen wife, Preeti Choksi. Choksi was preparing for a move to Geneva, Switzerland, when he got Belgium’s F-Residency card using forged documents two weeks before his arrest.
PNB scam whistleblower on Choksi’s arrest
PNB scam whistleblower Hari Prasad praised Mehul Choksi arrest but warned that extradition to India would be difficult since his “wallet is full” and he can hire the best lawyers to avoid it, like Vijay Mallya.”
“Wow, Mehul Choksi getting arrested in Belgium is great news for India and all those who got cheated by him. The government must bring him back to India as soon as possible, and justice must be delivered,” ANI quoted him.
He, as per the news agency, added, “Apart from bringing him back, the most important thing is to get back all those billions of dollars he looted from India and stashed anywhere in the world. Hopefully, the Government of India will succeed this time. Great news.”
