Mumbai/New Delhi: A “close” associate and vice-president of a firm of fugitive diamantaire Nirav Modi has been arrested by the Enforcement Directorate (ED) in connection with a money-laundering probe in the over ₹12,500 crore Punjab National Bank scam, officials said on Wednesday.
Shyam Sunder Wadhwa, vice-president of Firestar group, was arrested on Tuesday night under the Prevention of Money Laundering Act (PMLA), the officials said.
The arrest was made in connection with the alleged fraudulent issuance of 150 Letters of Undertaking (LoUs) worth ₹ 6,498 crore through a Punjab National Bank branch and subsequently, laundering of the funds so raised.
Of the total amount, about Rs 5064 crore was used allegedly for extinguishing the existing credit liabilities of the buyers, availed earlier from Indian bank branches abroad. The balance amount of Rs 1,448 crore was used for making payment to 17 overseas firms, including Hong Kong-based Aura Gem Company Ltd and Sino Traders Ltd.
The ED alleges that Wadhwa, who is also a Chartered Accountant, had made one Kartik Doshi a shareholder in Sino Traders and got him to sign all the relevant documents of the Hong Kong-based company.
Of the funds so received, Aura Gem transferred an amount of ₹468 Crore and Sino Traders ₹506.69 crore to the partnership firms, thus allegedly completing the money laundering process.
Accordingly, the agency has accused Wadhwa of assisting Nirav Modi in the offence of money laundering. “However, he was not coming out with the facts related to the deals to which he was privy and was also trying to mislead the investigators. Therefore, he has been arrested,” said the official.
This is the ED’s first arrest in the case. He was described as a “close confidant” of Modi.
“He is in close touch with Modi and is also involved in money laundering at the behest of and in aid of Nirav Modi,” an official said.
Wadhwa is expected to be produced before a local court in Mumbai today. The central probe agency said Wadhwa will help it in “unravelling the truth behind the scam”.
It alleged that he was trying to “mislead” the agency during interrogation but confessed doing the paperwork for creating two firms and appointing “dummy” directors in them.
The central probe agency has filed two money laundering FIRs against Nirav Modi and his uncle and Gitanjali Gems promoter Mehul Choksi to probe the alleged fraud in Punjab National Bank.
It has conducted a total of 251 country-wide searches in the case after it began the criminal probe against the accused in February. The total seizure and attachment of diamond, gold, precious and semi-precious stones and other movable and immovable assets in the case stand at Rs 7,664 crore.