Billionaire jeweler denies huge Indian bank fraud
Billionaire jeweler denies huge Indian bank fraud
“There is nothing, there is nothing in it,” Vijay Aggarwal, a lawyer representing Modi told Reuters, referring to a police complaint filed by the state-run bank that said companies linked to the jeweler and his relatives received credit worth close to $1.8 billion between 2011 and 2017 using false guarantees supplied by two bank officials.
Aggarwal, speaking by telephone, declined to comment on Modi’s whereabouts. Indian officials are on the lookout for Modi and his family, who police said left India in January prior to the case being filed.
“Everything is documented,” Aggarwal said of Modi’s dealings with PNB, adding that the bank had regularly levied fees on its dealings with the jeweler’s firms.
According to the police complaint, the two officials at a Mumbai branch of PNB fraudulently steered credit to firms linked to Modi and entities tied to jewelry retailer Gitanjali Gems, led by Modi’s uncle, Mehul Choksi.
“They’re covering themselves up,” Aggarwal said referring to the PNB complaint. “They want to avoid liability ... that is why they are cooking up this story.”
Asked about his legal strategy, Aggarwal said: “While there’s no chargesheet, there’s no strategy. When there’s a chargesheet, there will be a strategy.”
Choksi, who has also left the country, has not commented on the matter. Gitanjali, in a regulatory filing, denied Choksi’s involvement in the alleged fraud.
PNB did not immediately respond to the lawyer’s comments.
Separately, in a letter to PNB officials, Modi stated that his companies owe the bank under 50 billion rupees ($775.25 million), much lower than the amount alleged by the bank. He also said PNB has jeopardized its chances of recovering the sums owed by going public with its allegations.
“The erroneously cited liability resulted in a media frenzy which led to immediate search and seizure of operations, and which in turn resulted in Firestar International and Firestar Diamond International effectively ceasing to be going-concerns,” he wrote in a letter seen by Reuters. “This jeopardized our ability to discharge the dues of the group to the banks.”
Both companies are controlled by Modi. The fraud allegedly involves at least three firms controlled by Modi and other firms owned by Choksi.
“Your actions have destroyed my brand and the business and have now restricted your ability to recover all the dues,” said Modi in the letter, accusing PNB of acting in haste and noting that his firm had always been current on paying its dues.
Five bank officials, including the two at the Mumbai branch, have been arrested so far.
The alleged fraud occurred as one PNB deputy manager, with the assistance of one or more colleagues, issued more than 100 fraudulent Letters of Undertaking, guarantees sent to other banks so that they would provide loans to a customer.
After entering the transactions on the SWIFT messaging system, the official, who worked at the same branch from 2010 to 2017 despite normal bank practices of regular rotations — did not record them on PNB’s internal system, according to the bank’s complaint.
A PNB source said on Tuesday that all its branches have now been asked to reconcile SWIFT messages with entries in their core banking system going back eight or nine years.
The bank has also asked branches to ensure no clerical staff stay in one office for more than five years, and officers no more than three years, the source said.
The fraud case has stunned financial markets and sent PNB shares tumbling for a fifth straight trading day, losing more than a quarter of its market value since disclosing the fraud.
Ratings agency Fitch placed the bank on negative watch. Later, Moody’s also placed PNB’s ratings under review for a downgrade.
“PNB’s capital position would deteriorate markedly, and fall below minimum regulatory requirements, if the bank is required to provide for the entire (fraud) exposure,” Moody’s said in a note on Tuesday.
SABIC prepares to meet investors to offer bond
- The Kingdom’s petrochemical giant will be meeting investors in London, New York, Los Angeles and Boston from Sept. 25
- SABIC has also confirmed the appointment of BNP Paribas and Citigroup as global coordinators on the sale
LONDON: Saudi Basic Industries Corp. (SABIC) is preparing to offer its dollar-denominated unsecured bond to the global market with investor meetings due to start this week.
The Kingdom’s petrochemical giant will be meeting investors in London, New York, Los Angeles and Boston from Sept. 25, according to a filing on the Saudi stock exchange on Tuesday.
The Saudi company is likely to be keen to tap into the heightened international interest in the Kingdom’s financial markets following the lifting of some restrictions on foreign investors’ activities at the start of the year.
SABIC has also confirmed the appointment of BNP Paribas and Citigroup as global coordinators on the sale, alongside HSBC Bank, Mitsubishi UFG Securities EMEA and Standard Chartered Bank acting as joint lead managers, in its Tadawul note.
The proposed issuance has been well-received so far by analysts with ratings agency Moody’s Investor Service assigning an ‘A1’ rating to the proposed senior unsecured notes to be issued by the financial vehicle, referred to as SABIC Capital II, and guaranteed by SABIC itself.
“SABIC’s A1 rating reflects its strong business position in the chemical sector and its ability to weather industry volatility, particularly given its healthy operational cash flows and conservative liquidity profile,” said Rehan Akbar, a senior analyst at Moody’s, in a note on Monday.
The bond is anticipated to be used in part to refinance an existing SR11.3 billion ($3 billion) one-year bridge loan raised in January this year to fund the company’s 24.99 percent stake in the Swiss chemical company Clariant, according to the Moody’s note. All regulatory requirements were completed on this acquisition earlier this month.
Cash proceeds from the bond may also be used to repay a $1 billion bond due on Oct. 3, according to Moody’s.
On Tuesday SABIC confirmed that the bond will be used mainly to refinance “outstanding financial obligations” of the company and its subsidiaries.
Analysts at rating agency S&P Global were also upbeat about SABIC’s outlook, with research published on Monday stating that the company has “strong profitability” via its KSA operations and a “strong” liquidity position.
“The debt issuance is helpful for the credit profile in the sense that it extends the company’s debt maturity profile and strengthens its liquidity position,” said Tommy Trask, corporate and infrastructure credit analyst at S&P Global.
The agency currently assigns the petrochemical firm an ‘A Minus’ rating, with a “stable outlook,” which it said reflects its “view on the sovereign as well as its expectations that SABIC will maintain high profitability under current benign industry conditions.”
S&P Global’s report said margins in the global chemical industry will “largely stabilize in 2018 following several years of improvement, attributable to the increase in commodity chemical capacity.”
However, it also warned that a key risk to credit quality is
the trend for mergers and acquisitions within the sector and the “potential negative impact on credit metrics from funding them with debt.”