Nirav Modi’s letter to PNB; Supreme Court to hear case

Ever since the PNB scam came to light, the media was eager to know Modi’s side of the story and has been searching for the billionaire.

Nirav Modi, the kingpin behind the largest banking scam in the country, has in a letter blamed the PNB, saying that the bank’s overzealousness in going public had shut the doors on his ability to clear the loan outstanding, which he claims is far less than is being hyped in the media.

In a letter Modi wrote on February 15/16 to the PNB management, he has pegged the outstanding under Rs 5,000 crore. “The erroneously cited liability resulted in a media frenzy which led to immediate search and seizure of operations; this, in turn, resulted in Firestar International and Firestar Diamond International effectively ceasing to be going-concerns. This jeopardized our ability to discharge the dues to the banks,” Modi, who left the country along with his family in the first week of January, wrote in the letter.

“In the anxiety to recover your dues immediately — despite my offer on February 13, a day before the public announcement, and on 15 — your actions have destroyed my brand and the business. You have also restricted your own ability to recover all the dues, leaving a trail of unpaid debts,” he said. The letter also refers to the extended discussions between him, and between his representatives and the bank officers and also his emails on February 13 and 15, 2018.

About the Rs 11,000-crore loss claimed by the PNB in the FIR, Modi said, “As you are aware, this is entirely incorrect and the liability of the Nirav Modi Group is substantially less. Even after your complaint was filed, in good faith, I wrote to you saying please sell/allow me to sell Firestar Group or their valuable assets, and recover the dues not just from Firestar Group, but also from the three firms.”

Valuing his domestic business at around Rs 6,500 crores, he said, “This could have helped reduce/discharge the debt to the banking system,” but quickly added that this is not possible now, as all his bank accounts have been frozen and assets have been sealed or seized.

READ ALSO: Congress launches scathing attack over PM Narendra Modi’s silence on PNB fraud case

He goes on to state that PBN had time and again acknowledged that “the buyers credit facility had been extended by it to the three partnership firms for several years; that there had been no default on the part of these firms over all these years; that money has gone through PNB over all these years for the repayment of the advances given by the overseas bank branches under the buyers credit. “That Firestar International and Firestar Diamond International have never been in default to any bank, and the bankers are fully secured”.

He also states that PNB has over the years been earning bank charges to the tune of crores of rupees on the buyers’ credit facility extended by PNB to the three partnership firms and that PNB has extended the money to the firm’s buyers as well from where also it has been receiving full payments, with interest…

On the CBI/ED searches that have yielded Rs 5,649 crores, he said, “These, and other assets of the group and the three firms could have settled all the amounts due to the banks. However, now that stage appears to have passed.” He concluded by requesting the bank to “be fair, and support my efforts to make good all the amounts that are found due by my group to all banks.”

Owning up everything, he said the bank has wrongly named his brother, who is not at all concerned with the operations of the three firms or other companies. ‘‘My wife is not connected with any business operations at all and she has been wrongly named. My uncle is also wrongly named in this complaint since he has an independent and unconnected business and none of them are aware or concerned with my dealings with your bank.”

“Whatever may be the consequences I may face for my actions, the haste was, in my humble submission, unwarranted,” Modi concludes and has requested the bank to permit payment of salaries to 2,200 employees from the balance lying in the current accounts.

READ ALSO: The irony: PNB won 3 awards for vigilance in the last 3 years

Here is the letter:

Dear Sir/Madam, 

1. I refer to the extended discussions between us, and between my representatives and your officers. I also refer to my emails dated 13th and 15th February 2018. 
2. In view of the recent actions by you, the authorities, and the extensive press coverage in the last couple of days, I must state my position to the extent it is relevant at this stage. The media suggests that the liability of the Nirav Modi Group is over Rs 11,000 crores. As you are aware, this is entirely incorrect and the liability of the Nirav Modi Group is substantially less. Even after your complaint was filed, in good faith, I wrote to you saying please sell/ allow me to sell Firestar Group or their valuable assets, and recover the money that may be found due not just from Firestar Group, but also from the three firms. The valuation of the business was approximately Rs. 6,500 crores which could have helped reduce/discharge the debt to the banking system. 
3. However, the erroneous liability resulted in a media frenzy led to immediate search and seizure of operations, which has, in turn, resulted in FirestarInternational Private Limited and Firestar Diamond International Private Limited effectively ceasing to be going concerns. This has thereby jeopardized our ability to discharge the dues of the group to the banks. 
4. In light of this, it is necessary to reinstate some facts: 

I. You have acknowledged that: 

(a) The Buyers Credit Facility has been extended by PNB to the three partnership firms since several years. 

(b) There has been no default on the part of any of these firms over all these years. 

(c) Money has gone through PNB over all these years for the repayments of the advances given by the overseas branches of banks under the Buyers Credit. 

(d) FIPL and FDIPL have been profitable, enjoyed a high (A-) credit rating, and have never been in default to any bank, and its bankers are fully secured. 

1. You are aware that: 

   (a) PNB has over the years been earning bank charges to the tune of crores of rupees on the Buyers Credit Facility extended by PNB to the three partnership firms. 

   (b) The banks that have extended the money to the firm’s buyers have been receiving payment in full, with interest, in time all these years. 

Yesterday, FIPL and FDIPL’s inventory has been seized by the authorities. As per press reports, the valuation of the is Rs. 5,649 crores. These and other assets of FIPL/FDIPL and the three firms (including receivables and assets seized) could have settled all the amounts due to banks. However, now that stage appears to have passed, and there is general panic. 

I urge you once again to be fair, and in the interests of transparency, justice, the banking system and India as a whole, support my efforts to make good all the amounts that are found due by my group to all banks. 

In your complaint, you have wrongly named my brother, who was not at all concerned with the operations of the three firms or FIPL (India) and FDIPL (India). My wife was not connected with any business operations at all and she has been wrongly named. My uncle is also wrongly named in this complaint since he has an independent and unconnected business from mine and none of us are aware or concerned with his dealings with your bank. 

The matter is being described as India’s largest banking fraud. This is far from the truth. Nirav Modi Group ran a legitimate luxury brand business and the brand had become India’s foremost global luxury brand, standing side by side with some of the biggest jewelry brands in the world. In the anxiety to recover your dues immediately, despite my offer, your actions have destroyed my brand and the business and have now restricted your ability to recover all the dues leaving a trail of unpaid debts. Whatever may be the consequences I may face for my actions, the haste was, in my humble submission, unwarranted. 

I would request you to permit salaries for FIPL and FDIPL to be paid for the 2200 employees from the balance lying in the current accounts. Our HR head will send you a breakup of the monthly salary. 

Yours Sincerely, 
Nirav Modi 

According to an international news agency, Nirav Modi is staying at his family friend’s farmhouse in a Belgium, as opposed to earlier reports which stated that he was spotted in New York.

The Supreme Court is set to hear the case on the 23^rd of February.