Mehul Choksi case

The law and an outlaw: the hunt for Mehul Choksi

Print edition : July 02, 2021

Mehul Choksi arriving at the magistrate’s court in Roseau, Dominica, on June 4. Photo: AP

A Gitanjali Gems store in Mumbai in 2012. The company was India’s top diamond and gold jewellery retailer by sales then. Photo: Bloomberg

Vijay Mallya at the Royal Courts of Justice in London after appealing against extradition to India, on July 2, 2019. Photo: AP

Nirav Modi, a file picture. Photo: THE HINDU ARCHIVES

The Mehul Choksi extradition saga takes a new turn, involving a honey trap, violence and a dramatic escape, but legal hurdles and confusion over citizenship stymie the E.D.’s attempts to bring the fugitive to justice.

Mehul Choksi, a diamond merchant on the run since 2017 after orchestrating a colossal financial fraud, was once a sparkling figure in Mumbai’s business and social circles but is now among the most wanted fugitives from India and has a ‘red corner notice’ issued against him. However, owing to extradition issues, the Indian government is finding it difficult to nab Choksi and a growing number of what are known as fugitive economic offenders (FEOs).

Choksi, the former owner of Gitanjali Gems, fled the country just before a Rs.14,350-crore Punjab National Bank (PNB) financial fraud involving him was uncovered. He is now part of a band of economic offenders who have taken citizenship in well-known havens for those wanted by the law for various offences, including tax evasion.

Choksi, his nephew Nirav Modi, who is also wanted in the PNB scam and is in hiding, the liquor baron Vijay Mallya, the cricket magnate Lalit Modi, and Sterling Biotech chief Nitin Sandesara, are among 18 business fugitives being pursued by the Enforcement Directorate (E.D.). But it is not for lack of trying that these men remain free. The authorities cannot seem to get past convoluted extradition treaties to bring these individuals to justice.

Some observers have said the Choksi case may be the turning point in putting together an aggressive and international effort to pressure safe havens such as the Eastern Caribbean islands from harbouring and defending criminals from other countries.

Also read: A mega bank scam

In March 2018, a multi-crore financial scam came to light where Choksi and Nirav Modi had connived with PNB officials to issue fraudulent letters of undertaking (LoUs) for their companies, which they used to seek credit from other financial institutions. According to the police, this had been going on for years, and the deceit was discovered when a new manager did a background check on one of Modi’s companies.

By January 2018, Choksi and Modi had left the country, probably realising that the game was up.

Needless to say, the case shook the banking industry to such an extent that the government quickly passed the Fugitive Offenders Bill, which allowed it to confiscate assets of a fugitive, and the Reserve Bank of India scrapped banking instruments such as the LoU in an attempt to plug a loophole and improve banks’ due diligence in trade credit.

Additionally, investigations revealed that Choksi’s well-known brand Gili had duped thousands of buyers, selling them machine-made diamonds as real ones.

Choksi’s escape

Choksi, who was reportedly living in the Caribbean nation of Antigua and Barbuda, went missing on May 23, 2021. According to reports, he resurfaced the following day in Dominica, another Caribbean island. He was reportedly found late at night sitting on a bench near a harbour, allegedly injured and bruised. The Dominican police took him into custody and the case has since spiralled into a potboiler complete with elements such as a honey trap, kidnapping, torture, an escape plot and some political involvement.

The E.D. spared no expense in nabbing him, chartering a private plane all the way to Dominica to supposedly bring him back. E.D. officials returned empty-handed as the island nation said it needed to follow due legal process and that Choksi was technically an Antiguan citizen, which meant that India did not have jurisdiction over him.

Also read: In search of clues

The fugitive diamantaire’s lawyers told the international media that Choksi was lured by Barbara Jabarica, a woman who he seemingly knew well, into having dinner at her house. When he went over, six men attacked him. Choksi believes a few of them were Indian. The lawyer said the men beat up Choksi, gave him an electric shock and placed a hood over his head. The men then took him in a yacht.

Apparently, Choksi was subsequently transported to a coast guard vessel, which left him at the harbour in Dominica. The Dominica police’s version is that Choksi was found sitting on a bench at the Jolly harbour, disoriented and physically injured.

However, other reports stated that Choksi, anticipating the Antiguan government’s willingness to collaborate with India and the fact that the red corner notice made it risky for him to leave the country, staged his kidnapping. The plan was to reach Cuba by boat. However, a tip-off to Dominica botched this plan and he was caught.

But Choksi’s statement on June 7, 2021, in which he gave interrogators details of his ordeal on the yacht, seems to suggest that the staged kidnapping version may not be true. But through a few statements in the media, the Antiguan government has alluded to the whole affair being a set-up by Choksi.

The E.D. officials apparently reached Dominica in the hope of nabbing the fugitive but the island country’s High Court granted Choksi an injunction preventing the chief of police from sending him out of the country without the court’s permission. For now, Choksi has been charged with illegal entry into Dominica.

Meanwhile, Choksi’s family alleged that the Indian government was behind the entire episode. They alleged that the Indian government, in an arrangement with Antigua, planted Barbara Jabarica as part of a ploy to ensnare the fugitive.

In a kidnapping complaint filed in Antigua, Choksi said he was told by the boat crew that an Indian politician was waiting in Dominica to interview him. Choksi’s family alleged that the Indian authorities got him to enter Dominica illegally so that they would send him back to Antigua, where he could be declared a criminal and eventually extradited.

Also read: A warning ignored

On June 7, 2021, Prime Minister Gaston Browne of Antigua and Barbuda, told international media agencies that he had ordered an investigation into the Choksi “kidnapping”. Browne said that abduction was a serious matter and that his country’s law enforcement and executive would be concerned if it were true. While he expressed doubts over the kidnapping story, he said the kidnapping complaint filed by Choksi’s lawyers would be acted upon.

A lawyer, on condition of anonymity, said that the tone and reactions from both island nations indicated that they were willing to work with the Indian government in the Choksi case. To begin with, the private plane with Indian sleuths, who were reportedly carrying documentation to extradite Choksi, was allowed to land in Dominica. The lawyer said: “This is a sign that the Dominican government is cooperating. Even if Choksi is not going back to India, he has a long trial ahead, beginning with illegal entry into Dominica. In this, India has won round one.”

Extradition hurdles

Antigua and Barbuda signed an extradition treaty with India in 2001. According to the Ministry of External Affairs, the treaty falls under the Indian Extradition Act, 1962, which permits India to requisition the return of a wanted criminal, but it only applies to Indian citizens. Choksi claims he is no longer an Indian citizen as he surrendered his passport in 2018 to the Indian High Commission in Guyana.

There is some ambiguity on the issue of Choksi’s passport surrender. The E.D. claimed that India had not accepted it and that a certificate of surrender of passport was not issued. Therefore, he remains an Indian citizen.

In 2019, the E.D. had begun extradition proceedings with Antigua and Barbuda. Apparently, Antigua said it will revoke Choksi’s citizenship as it does not permit people with criminal records to secure citizenship.

Additionally, an Interpol notice against him is enough ground to hand him over to India. Choksi has challenged the citizenship issue in the Antiguan High Court.

More importantly, India and Antigua and Barbuda are members of the United Nations Convention Against Corruption; hence, the island nation is legally bound to extradite Choksi to India. Between legal loopholes, Antigua and Barbuda being part of the Commonwealth and the U.N., the heat was getting unbearable and Choksi probably knew it was a matter of time before the E.D. nabbed him.

The trial will reveal whether Choksi staged the kidnapping to escape to Cuba or whether the Indian government, along with the Antiguan and Dominica governments, plotted to capture him in a dramatic high seas operation. The lawyer said: “Maybe they have to go through such lengths because of the complicated extradition process.”

Also read: When business turns ‘easy’

The Indian government’s lack of astuteness is glaring in this case. Obviously, it is routine for businessman to travel overseas; therefore, Choksi’s departure could have passed for a regular trip. Yet, by 2017 it was widely known that Gitanjali Gems was struggling. Did the Ministry of External Affairs, the E.D. and the Mumbai Police miss the red flag when Choksi left the country in November 2017?

When Antigua and Barbuda granted him citizenship, it required a police clearance certificate issued by the Regional Passport Office, Mumbai. Even that was given with little investigation, the lawyer said.

Nirav Modi, meanwhile, is in the United Kingdom, which appears to offer him better protection. Although India and the U.K. have signed an extradition treaty and are part of the Commonwealth, records show that it is almost impossible to extradite criminals, and several embezzlers such as Vijay Mallya and Lalit Modi have made the U.K. their home.

An instance of what the E.D. is up against: Vijay Mallya’s lawyer once told the court that poor jail conditions in India would be tantamount to inhuman and degrading treatment. The U.K. courts give weight to reasons like this, and given the realities of Indian jails, the Indian government could not respond.

Antigua and Barbuda’s Citizenship by Investment programme costs as little as $100,000 (Rs.73 lakh). (Several Eastern Caribbean islands offer similar schemes, and many of the rich and famous from across the world buy citizenship in order to stash money and pay lower taxes.) The scheme has come under scrutiny by the international community as its purpose is to enhance the country’s economy by attracting investment through giving residency. Unfortunately, the island is turning into a safe space for the world’s fugitives.

There was a time when Choksi and Modi were the toast of Mumbai. Gitanjali Gems launched the Gili branded jewellery line in 1994. Gili made 18k gold fashionable; the lower carat was traditionally not popular among Indian consumers.

The success spurred them to create Nakshatra, D’damas, Asmi, Sangini, Maya, Shuddhi, World of Solitaire, and Giantti. Top Bollywood actors endorsed the nine brands, which were valued at Rs.5,584 crore in 2011. Overexposure and rapid expansion as well as Choksi being charged with stock market manipulation led to the company’s decline around 2013. According to industry reports, the company is now bankrupt.

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