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India fines jewellery firm for withholding information in US$2b bank fraud
[BENGALURU] India's securities regulator on Thursday fined jewellery retailer Gitanjali Gems and its executives 50 million rupees (S$973,430) for failing to disclose key information related to a US$2 billion fraud at Punjab National Bank (PNB).
Gitanjali's promoter and managing director, Mehul Choksi; his nephew, billionaire jeweller Nirav Modi, and others were accused of being involved in fraudulent transactions that led to losses of roughly US$2 billion for PNB.
PNB, India's second-biggest state-run bank, in 2018 alleged that a few rogue employees had issued fake bank guarantees over several years to help jewellery groups - controlled by Modi and Choksi - raise funds in foreign credit. Both have denied any wrongdoing.
Gitanjali failed to properly disclose the withdrawal of the credit limit by PNB, actions by various enforcement agencies relating to the case and the resignation of key executives, the Securities and Exchange Board of India (SEBI) said in an order.
Choksi and the company's executive director, Dhanesh Sheth, were also fined by the regulator.
"The deliberate defiance of the mandatory obligations and hiding the crucial and material information from investors, regulators and Stock Exchange, as found in this case should be dealt with sternly," the SEBI said.
The regulator also said that Gitanjali Gems failed to make proper disclosures about defaulting on bond payments owed to state-run Life Insurance Corp, India's largest insurer.
Modi was arrested in London in March last year and is currently fighting extradition to India, while Choksi, according to reports, is residing in the Caribbean nation of Antigua and Barbuda.