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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Agencies
February 20,2020

Tirupur, Feb 20: Nineteen people died in a collision between a Kerala State Road Transport Corporation bus and a truck near Avinashi town of Tirupur district on Thursday morning here.

The bus was on its way to Ernakulam in Kerala from Bengaluru in Karnataka when the mishap occurred.

Deputy Tehsildar of Avinashi Town informed, "19 people that include 14 men and 5 women, died in the collision between the bus and the truck near Avinashi town."

The bodies have been taken to Tirupur government hospital.
Further details are awaited.

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News Network
January 8,2020

Tehran, Jan 8: Iran struck back at the United States for the killing of a top Iranian general early Wednesday, firing a series of ballistic missiles at two Iraqi bases housing U.S. troops in a major escalation that brought the two longtime foes closer to war.

Iranian state TV said it was in revenge for the U.S. killing of Revolutionary Guard Gen. Qassem Soleimani, whose death last week in an American drone strike near Baghdad prompted angry calls to avenge his slaying. A U.S. official said there were no immediate reports of American casualties, though buildings were still being searched.

Soleimani's killing and the strikes by Iran came as tensions have been rising steadily across the Mideast after President Donald Trump's decision to unilaterally withdraw America from Tehran's nuclear deal with world powers. They also marked the first time in recent years that Washington and Tehran have attacked each other directly rather than through proxies in the region. It raised the chances of open conflict erupting between the two enemies, which have been at odds since Iran's 1979 Islamic Revolution.

But in a tweet shortly after the missile launches, Iran's foreign minister called a ballistic missile attack a ``proportionate measures in self-defense'' and said it was not seeking to escalate the situation but would defend itself against any aggression.

Iran initially announced only one strike, but U.S. officials confirmed both. U.S. defense officials were at the White House, likely to discuss options with Trump, who launched the strike on Soleimani while facing an upcoming impeachment trial in the Senate,

Iran's Revolutionary Guard warned the U.S. and its regional allies against retaliating over the missile attack against the Ain al-Asad air base in Iraq's western Anbar province. The Guard issued the warning via a statement carried by Iran's state-run IRNA news agency.

``We are warning all American allies, who gave their bases to its terrorist army, that any territory that is the starting point of aggressive acts against Iran will be targeted,'' The Guard said. It also threatened Israel.

After the strikes, a former Iranian nuclear negotiator posted a picture of the Islamic Republic's flag on Twitter, appearing to mimic Trump who posted an American flag following the killing of Soleimani and others Friday in a drone strike in Baghdad.

Ain al-Asad air base was first used by American forces after the 2003 U.S.-led invasion that toppled dictator Saddam Hussein, and later saw American troops stationed there amid the fight against the Islamic State group in Iraq and Syria. It houses about 1,500 U.S. and coalition forces.

Two Iraqi security officials said at least one of the missiles appeared to have struck a plane at the base, igniting a fire. It was not immediately clear whether it was an Iraqi or U.S. jet. There were no immediate reports of casualties from the attacks, according to the officials, who spoke on condition of anonymity as they had no permission to brief journalists.

About 70 Norwegian troops also were on the air base but no injuries were reported, Brynjar Stordal, a spokesperson for the Norwegian Armed Forces told The Associated Press.

Trump visited the sprawling Ain al-Asad air base, about 100 miles or 60 kilometers west of Baghdad, in December 2018, making his first presidential visit to troops in the region. He did not meet with any Iraqi officials at the time, and his visit inflamed sensitivities about the continued presence of U.S. forces in Iraq. Vice President Mike Pence also has visited the base.

Iranian state TV said the Guard's aerospace division that controls Iran's missile program launched the attack, which it said was part of an operation dubbed ``Martyr Soleimani.'' Iran said it would release more information later.

The U.S. also acknowledged another missile attack on a base in Irbil in Iraq's semiautonomous Kurdish region.

``As we evaluate the situation and our response, we will take all necessary measures to protect and defend U.S. personnel, partners and allies in the region,'' said Jonathan Hoffman, an assistant to the U.S. defense secretary.

Wednesday's revenge attack happened a mere few hours after crowds in Iran mourned Soleimani at his funeral. It also came the U.S. continued to reinforce its own positions in the region and warned of an unspecified threat to shipping from Iran in the region's waterways, crucial routes for global energy supplies. U.S. embassies and consulates from Asia to Africa and Europe issued security alerts for Americans. The FAA also warned of a "potential for miscalculation or mis-identification" for civilian aircraft in the Persian Gulf amid in an emergency flight restriction.

A stampede broke out Tuesday at Soleimani's funeral, and at least 56 people were killed and more than 200 were injured as thousands thronged the procession, Iranian news reports said. Shortly after Iran's revenge missile launches early Wednesday, Soleimani's shroud-wrapped remains were lowered into the ground as mourners wailed at the grave site.

Tuesday's deadly stampede took place in Soleimani's hometown of Kerman as his coffin was being borne through the city in southeastern Iran, said Pirhossein Koulivand, head of Iran's emergency medical services.

There was no information about what set off the crush in the packed streets, and online videos showed only its aftermath: people lying apparently lifeless, their faces covered by clothing, emergency crews performing CPR on the fallen, and onlookers wailing and crying out to God.

``Unfortunately as a result of the stampede, some of our compatriots have been injured and some have been killed during the funeral processions," Koulivand said, and state TV quoted him as saying that 56 had died and 213 had been injured.

Soleimani's burial was delayed, with no new time given, because of concerns about the huge crowd at the cemetery, the semi-official ISNA news agency said.

A procession in Tehran on Monday drew over 1 million people in the Iranian capital, crowding both main avenues and side streets in Tehran. Such mass crowds can prove dangerous. A smaller stampede at the 1989 funeral for Ayatollah Ruhollah Khomeini killed at least eight people and injured hundreds.

Hossein Salami, Soleimani's successor as leader of the Revolutionary Guard, addressed a crowd of supporters gathered at the coffin in a central square in Kernan. He vowed to avenge Soleimani, who was killed in a U.S. drone strike Friday near Baghdad's airport.

``We tell our enemies that we will retaliate but if they take another action we will set ablaze the places that they like and are passionate about," Salami said.

``Death to Israel!'' the crowd shouted in response, referring to one of Iran's longtime regional foes.

Salami praised Soleimani's work, describing him as essential to backing Palestinian groups, Yemen's Houthi rebels and Shiite militias in Iraq and Syria. As a martyr, Soleimani represented an even greater threat to Iran's enemies, Salami said.

Soleimani will ultimately be laid to rest between the graves of Enayatollah Talebizadeh and Mohammad Hossein Yousef Elahi, two former Guard comrades killed in Iran's 1980s war with Iraq. They died in Operation Dawn 8, in which Soleimani also took part. It was a 1986 amphibious assault that cut Iraq off from the Persian Gulf and led to the end of the war that killed 1 million.

The funeral processions in major cities over three days have been an unprecedented honor for Soleimani, seen by Iranians as a national hero for his work leading the Guard's expeditionary Quds Force.

The U.S. blames him for killing U.S. troops in Iraq and accused him of plotting new attacks just before he was killed. Soleimani also led forces supporting Syrian President Bashar Assad in that country's civil war, and he also served as the point man for Iranian proxies in countries like Iraq, Lebanon and Yemen. Russian President Vladimir Putin met with Assad in Syria on Tuesday amid the tensions between Washington and Tehran.

Soleimani's slaying already has led Tehran to abandon the remaining limits of its 2015 nuclear deal with world powers as his successor and others vow to take revenge.

In Iraq, pro-Iranian factions in parliament have pushed to oust American troops from Iraqi soil following Soleimani's killing. Germany and Canada announced plans to move some of their soldiers in Iraq to neighboring countries.

The FAA warning barred U.S. pilots and carriers from flying over areas of Iraqi, Iranian and some Persian Gulf airspace. The region is a major East-West travel hub and home to Emirates airline and Dubai International Airport, the world's busiest for international travel. It earlier issued warnings after Iran shot down a U.S. military surveillance drone last year that saw airlines plan new routes to avoid the Strait of Hormuz.

The U.S. Maritime Administration warned ships across the Mideast, citing the rising threats. ``The Iranian response to this action, if any, is unknown, but there remains the possibility of Iranian action against U.S. maritime interests in the region,'' it said.

Oil tankers were targeted in mine attacks last year that the U.S. blamed on Iran. Tehran denied responsibility, although it did seize oil tankers around the crucial Strait of Hormuz, the narrow mouth of the Persian Gulf through which 20% of the world's crude oil travels.

The U.S. Navy's Bahrain-based 5th Fleet said it would work with shippers in the region to minimize any possible threat.

The 5th Fleet ``has and will continue to provide advice to merchant shipping as appropriate regarding recommended security precautions in light of the heightened tensions and threats in the region,'' 5th Fleet spokesman Cmdr. Joshua Frey told The Associated Press.

Iran's parliament, meanwhile, has passed an urgent bill declaring the U.S. military's command at the Pentagon and those acting on its behalf in Soleimani's killing as ``terrorists," subject to Iranian sanctions. The measure appears to be in response to a decision by Trump in April to declare the Revolutionary Guard a ``terrorist organization.''

The U.S. Defense Department used that terror designation to support the strike that killed Soleimani.

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Agencies
January 9,2020

The World Bank says that a lack of credit and drop in private consumption have led to a gloomy growth outlook for India with a steep cut in growth rate for the current fiscal year and only a modest gain projected for the next year.

India's growth rate is forecast to be only 5 per cent for the current fiscal year, weighed down by a growth of only 4.5 per cent in the July-September quarter, according to the 2020 Global Economic Prospects report released on Wednesday.

"In India, [economic] activity was constrained by insufficient credit availability, as well as by subdued private consumption," the Bank said.

The growth rate is forecast by the Bank to pick up to 5.8 per cent in the next fiscal year and to 6.1 per cent in 2021-22.

India's growth rate was 6.8 per cent in 2018-19.

The 5 per cent growth rate projection for the current financial year is a sharp cut of 2.5 per cent from the 7.5 per cent forecast made by the Bank in January last year, toppling it from the rank of the world's fastest growing economy.

India's performance follows a global trend of lowered growth weighed down by developed economies.

The report estimated world economic growth rate to be only 2.4 per cent last year and forecast it to edge up 0.1 per cent to 2.5 per cent in the current year.

Even with the lower growth rate of 5 per cent in the current fiscal year and 5.8 per cent forecast for the next, India holds the second rank among large economies, behind only China with an estimated growth rate of 6.1 per cent for 2019 and 5.9 per cent this year.

The report blamed "weak confidence, liquidity issues in the financial sector" and "weakness in credit from non-bank financial companies" for India's slowdown.

The Bank predicated India's recovery to 5.8 per cent in the coming financial year for India but "on the monetary policy stance remaining accommodative" and the assumption that "the stimulative fiscal and structural measures already taken will begin to pay off."

It also warned that sharper-than-expected slowdown in major external markets such as United States and Europe, would affect South Asia through trade, financial, and confidence channels, especially for countries with strong trade links to these economies."

The Bank said that the growth of advanced economies was 1.6 per cent last year and "is anticipated to slip to 1.4 per cent in 2020 in part due to continued softness in manufacturing."

In contrast the growth of emerging market and developing countries is expected to accelerate from 3.5 per cent last year to 4.1 per cent this year, the report said.

In South Asia, Bangladesh is estimated to have the highest growth rate of 7.2 per cent in the current fiscal year, although down from 8.1 per cent last fiscal year.

But its higher regional growth rates are coming off a lower base with a per capital gross domestic product of $1,698 compared to $2,010 for India.

Bangladesh is expected to grow by 7.3 per cent in the next financial year.

Pakistan's growth rate is estimated at only 2.4 per cent in the current fiscal year and is projected to rise to 3 per cent in the next, according to the Bank.

The Bank blamed monetary tightening in Pakistan for a sharp deceleration in fixed investment and a considerable softening in private consumption for the fall in growth rate from 3.3 per cent in the 2018-19 fiscal year.

Sri Lanka's growth rate was estimated to be 2.7 per cent last year and forecast to grow to 3.3 per cent this year.

Nepal grew by an estimated 6.4 per cent in the current fiscal year and will rise to 6.5 per cent in the next.

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