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NEW DELHI: In November 2017, weeks before diamond merchants Nirav Modi and his maternal uncle and Gitanjali Gems CEO Mehul Choksi were indicted for defrauding Punjab National Bank of over Rs 13,000 crore, Choksi had brought himself citizenship of the Caribbean isle of Antigua and Barbuda (A&B).
After the controversy broke over his status, the Citizenship By Investment Unit (CIU) of the A&B government tried to set the record straight, saying: “Mehul Choksi’s application was received by the CIU in May 2017 with the necessary documentary requirements including a police clearance certificate... The said police clearance certificate from the Government of India, Ministry of External Affairs Regional Passport Office, Mumbai, certified that there was no adverse information against Mr. Mehul Chinubbhai Choksi which would render him ineligible for grant of travel facilities including visa for Antigua and Barbuda.” Choksi took the oath of citizenship in January 2018.
In a terse response on Friday, the Ministry of External Affairs said, the Police Clearance Certificate (PCC) was issued to Mehul Choksi by Passport Office, Mumbai, for Antigua and Barbuda on March 16, 2017.
The PCC was issued on the basis of a clear Police Verification Report (PVR) on his passport. “As the PVR of Mehul Choksi was clear in the system at the time of issuance of PCC, the process followed by Passport Office, Mumbai was as per extant instructions.”
While the Antiguan authority responsible for grant of investment-linked citizenship named the Securities and Exchange Board of India (Sebi) as one of the Indian agency to have given such a clearance in case of Modi, the Indian capital markets regulator rejected the claim saying it neither received any such request, nor provided any such information to the concerned department in Antigua.
The authorities in the island country did a thorough check on Choksi from open source global agencies, including the Interpol, that there was "no instance" of any derogatory information against him, it added.
The Antiguan authorities, as part of their own checks, found two instances of Sebi action against Choksi's firms in 2014 and 2017 and sought more information on them, the report further said.
It further quoted CIU as claiming that Sebi had told authorities in Antigua that one case was "satisfactorily closed" and there was "insufficient evidence" to pursue the second matter.
However, the Indian regulator issued a statement today denying these claims.
"Sebi has neither received any request from the Citizenship by Investment Unit (CIU) of Antigua for updates on any investigation nor provided any such information to CIU," the regulator said.
As per the Antiguan media report, the CIU has said if there was a warrant against Choksi when his application of citizenship was being processed, Interpol should have been informed about it and it should have been part of national criminal database.
Choksi had fled India on January 4 this year and took oath of allegiance in Antigua on January 15.
His citizenship was cleared in November 2017.
On January 16, this year, the USD 2 billion scam was detected by Brady House branch of Punjab National Bank, making it the biggest banking scam in the country.
On July 29, 2016, Bengaluru resident Hari Prasad had informed the Prime Minister's Office about alleged nefarious activities of Choksi and his companies.
The Congress tried to put the government on the mat, with spokesperson Randeep Singh Surjewala tweeting: “Why did the MEA provide ‘clean chit certificate’ to Mehul Choksi in the `23,484 Cr PNB Scam in May 2017, despite the complaints and evidence being available 2 years earlier i.e 7th May, 2015, 26th May, 2015, 20th July, 2016, 26th July, 2016 and 3rd May, 2017?”
The ruling BJP has remained tightlipped so far.
The incident has also led to a heated debate in A&B, with the Opposition attacking the government. “These are doors that open us unnecessarily to people who may have bad intentions,” said Gisele Isaac, chairman of the United Progressive Party.
Choksi is one of the alleged masterminds of the USD 2 billion scam in state-run Punjab National Bank and uncle of fugitive diamantaire Nirav Modi.
In a recent response to a question by Congress leader Kapil Sibal, the Finance Ministry said in the Rajya Sabha that the PMO was "intimated" about the complaints regarding the PNB fraud in 2016 and the matter was referred to it.
"Ministry of Finance, vide Office Memorandum dated 1.3.2018, apprised PMO of action taken regarding the frauulent issuance of Letters of Undertaking in PNB," it said.
The reply, however, did not make it clear whether it referred to Prasad's specific complaint against Choksi.
Choksi and his companies allegedly availed credit from overseas branches of Indian banks using the fraudulent guarantees of PNB given through letters of undertaking (LoUs) and letters of credit issued by the Brady House branch which were not repaid, bringing liability on the state-run bank, the officials have said.
An LoU is a guarantee given by an issuing bank to Indian banks having branches abroad to grant short-term credit to the applicant.
The price tag
To buy Antiguan citizenship, you can donate US $100,000 to its national development fund or buy real estate worth $400,000 there or invest $1,500,000 in a pre-approved business in that nation