The verdict of the extradition case of fugitive diamond dealer Nirav Modi will be handed down by the UK judge next month after the Indian government and Modi's defence lawyers made their final submissions at Westminster Magistrate's Court in London on Friday.
Judge Samuel Goozee will deliver his judgment on February 25, just under two years after Nirav Modi was arrested in London on multiple charges including defrauding the state-owned Punjab National Bank (PNB) of more than USD 2 billion.
Judge Goozee must decide if there is a 'prima facie' case that Modi - the one-time billionaire and jeweller to some of the most glamorous stars in the world - not only defrauded PNB but also laundered the proceeds of that fraud and subsequently attempt to destroy crucial evidence and intimidate witnesses.
Yesterday on the penultimate day of the hearing, Modi's lawyers have claimed that he is unfit to face solitary confinement. Today's attention turned to the extraordinary scheme wherein Modi is alleged to have perpetrated to defraud and enrich himself and his family using the funds of one of the oldest and biggest financial institutions in India.
Helen Malcolm QC, the formidable barrister representing the Crown Prosecution Service, which in turn is representing the Indian government began the final day's proceedings by carefully summarizing that very scheme.
It was a summary that clearly made Modi visibly uncomfortable - normally subdued, Modi was seen sighing and fidgeting frequently as he appeared at the court via video link from Wandsworth Prison in south London where he has been held since his arrest.
At the heart of the scheme is a conspiracy between Modi and several members of staff at PNB to siphon money out of the bank using 'Letters of Undertaking', a bank guarantee which allows a bank's customers to raise money from the foreign branches of other Indian banks as a form of short term credit.
Malcolm outlined how Modi set up a string of shell compes posing as third party suppliers in Hong Kong and the United Arab Emirates and then colluded with a PNB employee - Gokulnath Shetty - to obtain hundreds of LOU's over a 6-year period.
Malcolm told the court that the alleged fraud had enriched Modi and his family. One of the shell compes - Pacific Diamonds - had at one point paid out USD 48 million dollars to Modi himself, some USD 150 million to his father and a further USD 21 million to his brother in law Deepak.
"The simple and stark fact is that Modi used three partnership compes to acquire billions of dollars worth of credit which was entirely unsecured and LoUs were issued for wholly bogus trade. While the defence claims this is a mere commercial dispute, there is a plethora of evidence to point to a ponzi-like scheme where new LoUs were used to repay old ones," Malcolm said.
Modi laid the groundwork and took various steps to ensure that the fraud would go undetected for example by registering the shell compes in the UAE's Ajman Free Zone which does not require compes to file audited accounts.
The funds fraudulently obtained were also recycled through various other compes located in Hong Kong, India and the UAE using the very same jewellery that had made Modi a globally recognized Diamantaire.
Once the fraud was discovered at PNB, Modi and a number of accomplices scrambled to hide their tracks, Malcolm said, by perverting the course of the investigations launched by the Central Bureau of Investigation and the Enforcement Directorate. This included relocating a number of "directors" of the shell compes from the UAE to Cairo Egypt in 2018 where they were threatened and coerced into providing witness statements exonerated Modi.
The court was told that this particular effort was led by Modi's brother Nihal Modi, an effort that ultimately came to light after one of those forcibly detained in Cairo recorded some of the conversations between himself and Nihal Modi.
One of the most explosive moments of the trial had come in early 2020 when the court was played some of those recordings.
Malcolm also told of the elaborate steps taken by Modi, his associates and several employees of the PNB in order to avoid detection - including falsifying documents and creating elaborate but ultimately fictitious paper trails for the LOU's.
In response to Modi's defence team contends that the transactions, including the issuance of LOU's on "verbal" contracts between Modi and the bank, were entirely legitimate and above board.
Clare Montgomery QC, Modi's lawyer, also told the court that the so-called shell compes were no such thing and were trading property. The court had earlier been shown documents that suggested they did.
Perhaps the most extraordinary moment of the final day of this extraordinary trial came when Montgomery told Judge Goozee that what transpired in Cairo, Egypt did not amount to "witness intimidation" because they were not witnesses but rather "suspects".
She told the court that Modi and or his representatives were "perfectly able and had a right to offer them advice as co-accused" in the investigations launched by the Indian government.
Apart from charges relating to defrauding PNB through the use of fraudulent loan agreements to the tune of USD 2 billion, Modi also faces charges of money laundering, destruction of evidence and witness intimidation.
While Judge Goozee will rule on the February 25, Modi is expected to pursue a long and exhaustive appeals process in the UK.
( With inputs from ANI )
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