A 'fancy vivid yellow orange cushion cut' diamond fueled PNB fraud: Report

bloomberg
August 30, 2018

New Delhi, Aug 30: The price of a large yellow diamond alternately shrank and spiked by about a million dollars as it moved across the globe.

The three-carat gem was shipped at least four times between shadowy companies allegedly controlled by fugitive diamantaire Nirav Modi over about five weeks in 2011, according to a report by a US bankruptcy examiner. The practice of round-tripping--trading a good repeatedly to give the appearance of distinct transactions--was central to the multi-crore Punjab National Bank (PNB) scam - the largest bank fraud in Indian history, according to the report filed August 25.

The rapid-fire sales were described as part of a plan in which Modi and associates “fraudulently borrowed approximately $4 billion over a period of years by manufacturing sham transactions purportedly to ‘import’ diamonds and other gems into India using a web of more than 20 secretly controlled shell entities,” wrote John J Carney, the examiner in the bankruptcy case of three US jewelry companies indirectly owned by Modi.

The firms sought protection from creditors in February in New York as the celebrity jeweler’s empire unraveled. Authorities brought criminal charges against against him and alleged accomplices, and Modi became an international fugitive. He’s denied doing anything wrong.

The “fancy vivid yellow orange cushion cut” diamond was first sold by Firestar Diamond Inc., a US company indirectly owned by Modi, and shipped to Fancy Creations Company Ltd., a foreign shell company in Hong Kong also allegedly controlled by Modi, in August 2011, the report says. The price was almost $1.1 million.

The colorful stone was then shipped out two weeks later by Solar Export, a partnership formed by the Nirav Modi family trust, back to Firestar Diamond in the US, for closer to what it was really worth: $183,000, the examiner wrote.

Less than a week later, Firestar, which has offices on Fifth Avenue in New York City, shipped the diamond back to Fancy Creations in Hong Kong, this time for $1.16 million, the report asserts.

And two weeks after that, A Jaffe, the New York City-based diamond company owned by Modi, sold the diamond to World Diamond Distribution, which the report describes as a Modi shell company in the United Arab Emirates, this time for more than $1.2 million.

Long Journey

The practice of round-tripping, which ultimately totaled $213.8 million between 2011 and 2017, the alleged duration of the fraud, generated shipping invoices that were given to the state-owned PNB to obtain short-term loans using letters of undertaking, according to Carney.

The proceeds were then used to fund Modi’s lifestyle and business entities as well as using the funds from new loans to repay the old ones as they came due, the report states, citing a real-estate trust controlled by Modi that paid $25 million in cash for a luxury apartment in the Ritz Carlton on Central Park South in 2017.

Some of the shipments were so large and high-priced “that the packing slips alone should have raised suspicion,” wrote Carney, a former investigator and prosecutor for the US Securities and Exchange Commission and the Department of Justice.

Fedex Gems

In a break with industry practices, the Modi-owned US companies exported diamonds via FedEx instead of with a bonded courier -- including a 17-carat stone sold for $1.7 million and sent from New York City to Hong Kong -- even though FedEx insures packages only up to $150,000, the report states.

“There is no legitimate business reason to ship diamonds worth millions of dollars without obtaining appropriate insurance,” Carney wrote, citing a gem expert retained by the bankruptcy trustee. The report found “substantial evidence” to back up Indian criminal and civil authorities who say Modi’s US companies and senior officials were involved in transactions related to alleged bank fraud and money laundering.

Modi has previously denied wrongdoing, and a lawyer representing him declined to comment Monday on the examiner’s report. The US companies, Firestar Diamond, A. Jaffe and Fantasy Inc., which all operate out of the same New York offices, filed for Chapter 11 bankruptcy in February. (And the three companies still owe Federal Express about $86,000 in unpaid bills, according to a court filing in their bankruptcy case.)

Gem Cutters

Modi, 47, comes from a family of specialist gem cutters, and he has draped his jewels on Hollywood and Bollywood stars, including Kate Winslet, Naomi Watts and Priyanka Chopra. He bought A. Jaffe, an iconic engagement ring company founded in Manhattan in 1892, to add to his collection of brands in 2007 and opened eponymous boutiques in New York City, Macau, Singapore, Beijing and London. Now, he is reportedly in the U.K. and the Indian government has asked authorities there for his extradition.

The charges against Modi have sent shockwaves through Indian banking and politics as well as the international jewelry industry. The alleged crime undermined the prime minister’s anti-graft image and Punjab National Bank posted India’s biggest-ever quarterly bank loss this year after it took a $2 billion hit.

Punjab National Bank

The US examiner’s report “strengthens PNB’s position as a victim of a complex, multi-year fraud,” and the lender is expected to argue for a share of the sale proceeds once Firestar’s assets are sold and secured creditors are satisfied, said Seth R. Freeman, San Francisco-based senior managing director at financial services advisory firm GlassRatner.

A representative for Macy’s, which had previously bought jewelry from Firestar Diamond Inc., said in an email Monday, “We canceled all purchase activity with the company as soon as we became aware of the situation earlier this year.” Costco Wholesale Corp. and Zale Corp. declined to comment and J.C. Penney’s didn’t answer a message.

Other Modi associates were involved, according to Carney’s report, including Mihir Bhansali, chief executive at two of the Modi-owned US companies. Bhansali went to the office of Firestar Diamond in Dubai shortly after those companies filed for bankruptcy in February, according to an account given by the general manager of the Dubai office to Indian authorities and described in Carney’s report.

Speaking before employees in Dubai, Bhansali folded his hands and bowed, then asked them not to return to India or mention his name to any government authorities, according to the report. Bhansali then took hundreds of thousands of dollars in cash and 50 kilograms of gold and left town, the report asserts.

Bhansali’s lawyer, Thomas McCormack, declined to comment, but said in a letter to the examiner that his client denied any wrongdoing.

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News Network
January 19,2020

Shirdi, Jan 19: Shirdi in Maharashtra will remain closed for an indefinite period from today in the wake of state Chief Minister Uddhav Thackeray's decision to develop Pathri town in Parbhani district as Sai Baba's birthplace.

However, Deepak Madukar Muglikar, Chief Executive Officer of Shri Saibaba Sansthan Trust, has said that Sai Baba Temple in Shirdi will remain open today and will not be impacted by the closure of the city.

"There are some reports in media that Sai Temple in Shirdi will remain closed on January 19. I want to clarify that it is just a rumor. Temple will remain open on January 19," Mr Muglikar said.

A call has been given for indefinite closure of Shirdi after Mr Thackeray's reported comment terming Pathri in Parbhani as Sai Baba's birthplace.

"Devotees will not face any difficulty if they come to Shirdi," said B Wakchaure, member of Saibaba Sansthan Trust.

Uddhav Thackeray has recently announced that Pathri will be developed as the birthplace of Sai Baba for religious tourism and also took a review meeting of the development plans in the Parbhani district.

One of the most popular religious destinations in the country, Saibaba Temple in Shirdi witnesses lakh of devotees visiting the holy site every year.

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News Network
May 15,2020

May 15: Global tensions simmered over the race for a coronavirus vaccine Thursday, as the United States and China traded jabs, and France slammed pharmaceuticals giant Sanofi for suggesting the US would get any eventual vaccine first.

Scientists are working at breakneck speed to develop a vaccine for COVID-19, the disease caused by the virus, which has killed more than 300,000 people worldwide and pummelled economies.

From the US to Europe to Asia, national and local governments are easing lockdown orders to get people back to work -- while fretting over a possible second wave of infections.

Increased freedom of movement means an increased risk of contracting the virus, and so national labs and private firms are labouring to find the right formula for a vaccine.

The European Union's medicines agency offered some hope when it said one could be ready in a year, based on data from clinical trials already underway.

But Marco Cavaleri, the EMA's head of vaccines strategy, acknowledged that timeline was a "best-case scenario," and cautioned that "there may be delays."

The race for a vaccine has exposed a raw nerve in relations between the United States and China, where the virus was first detected late last year in the central city of Wuhan.

Two US agencies warned Wednesday that Chinese hackers were trying to steal COVID-19 vaccine research -- a claim Beijing rejected as "smearing" its reputation.

US President Donald Trump, who has ratcheted up the rhetoric against China, said he doesn't even want to engage with Chinese leader Xi Jinping -- potentially imperilling a trade deal between the world's top two economies.

"I'm very disappointed in China. I will tell you that right now," he said in an interview with Fox Business.

"There are many things we could do. We could do things. We could cut off the whole relationship."

On Capitol Hill, an ousted US health official told Congress that the Trump government had no strategy in place to find and distribute a vaccine to millions of Americans, warning of the "darkest winter" ahead.

"We don't have a single point of leadership right now for this response, and we don't have a master plan," said Rick Bright, who was removed last month as head of the US agency charged with developing a coronavirus vaccine.

The United States has registered nearly 86,000 deaths linked to COVID-19 -- the highest toll of any nation.

World leaders were among 140 signatories to a letter published Thursday saying any vaccine should not be patented and that the science should be shared among nations.

"Governments and international partners must unite around a global guarantee which ensures that, when a safe and effective vaccine is developed, it is produced rapidly at scale and made available for all people, in all countries, free of charge," it said.

But a row erupted in France after drugmaker Sanofi said it would reserve first shipments of any vaccine it discovered to the United States.

The comments prompted a swift rebuke from the French government -- President Emmanuel Macron's office said any vaccine should be treated as "a global public good, which is not submitted to market forces."

Sanofi chief executive Paul Hudson said the US had a risk-sharing model that allowed for manufacturing to start before a vaccine had been finally approved -- while Europe did not.

"The US government has the right to the largest pre-order because it's invested in taking the risk," Hudson told Bloomberg News.

Macron's top officials are scheduled to meet with Sanofi executives about the issue next week.

The search for a vaccine became even more urgent after the World Health Organization said the disease may never go away and the world would have to learn to live with it for good.

"This virus may become just another endemic virus in our communities and this virus may never go away," said Michael Ryan, the UN body's emergencies director.

The prospect of the disease lingering leaves governments facing a delicate balancing act between suppressing the pathogen and getting their economies up and running.

In the US, more grim economic data emerged Thursday, with nearly three million more Americans applying for unemployment benefits.

That takes the overall total to 36.5 million -- more than 10 percent of the US population.

Further signs of the damage to businesses emerged when Lloyd's of London forecast the pandemic will cost the global insurance industry about $203 billion.

European markets closed down, but Wall Street rallied despite the new jobless claims. In a sign of progress, the New York Stock Exchange trading floor was due to reopen on May 26.

The reopening of economies continued in earnest across Europe, where the EU has set out proposals for a phased restart of travel and the eventual lifting of border controls.

"Maybe it's a mistake, but we have no choice. Without tourists, we won't get by!" Enrico Facchetti, a 61-year-old former goldsmith, said of Venice's reopening.

Japan -- the world's third largest economy -- lifted a state of emergency across most of the country except for Tokyo and Osaka.

And Canadian Prime Minister Justin Trudeau said national parks would partially reopen on June 1.

But in Latin America, the virus continued to surge, with a 60 percent leap in cases in the Chilean capital of Santiago.

Authorities said 2,000 new graves were being dug at the main cemetery.

South Sudan reported its first COVID-19 death on Thursday.

And in Bangladesh, the first case was confirmed in the teeming Rohingya refugee camps in Bangladesh, which are home to nearly one million people.

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News Network
June 26,2020

Washington, Jun 26: The US is reviewing its global deployment of forces to ensure it is postured appropriately to counter the People's Liberation Army, given the increasing threat posed by China to Asian countries like India, Malaysia, Indonesia, and the Philippines, Secretary of State Mike Pompeo said on Thursday.

Mr Pompeo made those remarks in response to a question during the virtual Brussels Forum 2020 of the German Marshall Fund.

"We're going to make sure we're postured appropriately to counter the PLA. We think that the challenge of our times, and we're going to make sure we have resources in place to do that," Mr Pompeo said.
 
The force posture review is being done at the direction of President Donald Trump, as part of which the US is reducing the number of its troops in Germany from about 52,000 to 25,000, he said.

Mike Pompeo said that the force posture would be dictated by the ground realities.

"In certain places there will be fewer American resources. There'll be other places - I just talked about the threat from the Chinese Communist Party, so now threats to India, threats to Vietnam, threats to Malaysia, Indonesia, South China Sea challenges, the Philippines," he said.

"To the extent that that changed, the difference in what the US decided to do impacts adversely a threat some place, it may be that other nations need to step up and take responsibility for their own defense in ways that they hadn't done previously. So, we want to do this in full consultation with all of our partners all around the world, and certainly our friends in Europe," Mr Pompeo said.

President Trump is being criticised for reducing troops from Germany. His critics say that this will increase the threat from Russia to Europe.

Mike Pompeo, however, did not agree with that argument.

It has been a long time since there has been a strategic review of our force posture all across the world. The US undertook that starting about 2.5 years ago, whether that was our forces in Africa, our forces in Asia, the force we have in the Middle East and in Europe, he said.

"We began to say these are often decisions that were made in a different time. Should we reallocate those a different way? Should we have a different composition of those forces? Everyone always wants to talk about ground troops. I get it. I was a young tank officer. You described that. There's nothing I like as much as a good M1 tank.

"But it's often the case that the capacity to deter Russia or other adversaries isn''t determined any longer by just having a bunch of folks garrisoned someplace. So, we really went to back fundamentally relook, what is the nature of the conflict, what''s the nature of the threat, and how should we allocate our resources, whether that''s our resources in the intelligence community, our resources from the Air Force or the Marines and Army," Mr Pompeo said.

Last week, Mike Pompeo criticised the Chinese Army for "escalating" the border tension with India and militarising the strategic South China Sea. He also described the ruling Communist Party of China (CPC) as a "rogue actor".

"Our broad set of allocation of security apparatus, our ability to counter cyber threats, how do we allocate them? What''s the best way to do this? And the decision that you see the president made with respect to Germany is an outcome from a collective set of decisions about how we''re going to posture our resources around the world," said the top American diplomat on Thursday.

Changes in force posture is being taken in consultations with allies and friends, Mr Pompeo said.

"President Trump has spoken to this. (Defense) Secretary (Mark) Esper will be in London today and in Brussels tomorrow. We''ll talk about our plan and how we''re thinking about delivering it," he said.

"But you should understand this, and I hope our European partners will understand this as well. When you see what we ultimately conclude, how we ultimately deliver on the statements of the president made, that they''re aimed squarely at what we believe to be democracies'' fundamental interest and certainly America's most fundamental interest," Mr Pompeo said.

Earlier this month, Mike Pompeo had said that China's actions, be it on the India border, or in Hong Kong or in the South China Sea, were part of the behaviour of the ruling Communist Party in Beijing in the recent past.

China has been fast expanding military and economic influence in the Indo-Pacific region, triggering concern in various countries of the region and beyond.

China is engaged in hotly contested territorial disputes in both the South China Sea and the East China Sea. Beijing has built up and militarised many of the islands and reefs it controls in the region. Both areas are stated to be rich in minerals, oil and other natural resources and are vital to global trade.

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