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Indian billionaire jeweller denies involvement in $1.8 billion bank fraud case

  • Indian billionaire jeweller Nirav Modi has denied allegations that he was involved in a $1.8 billion loan fraud at Punjab National Bank.
  • Indian federal police have alleged that Modi and others conspired with several employees of the second-largest state-run bank to fraudulently obtain advances for paying overseas suppliers.
  • Separately, Modi has accused Punjab National Bank of having "jeopardised" his ability to pay back the dues — by making the case public, according to reports.
Indian supporters of the Congress Party shout slogans as they burn effigy of billionaire jeweller Nirav Modi in New Delhi on February 16, 2018.
Chandran Khanna | AFP | Getty Images
Indian supporters of the Congress Party shout slogans as they burn effigy of billionaire jeweller Nirav Modi in New Delhi on February 16, 2018.

Indian billionaire jeweller Nirav Modi has denied allegations that he was involved in a $1.8 billion loan fraud at Punjab National Bank (PNB), his lawyer told Reuters on Tuesday.

Indian federal police have alleged that Modi and others conspired with several employees of the second-largest state-run bank to fraudulently obtain advances for paying overseas suppliers.

Last week, PNB had said it detected fraudulent transactions worth $1.77 billion. Indian authorities had said they will probe the possibility of money laundering in the case.

Vijay Aggarwal, a lawyer for Modi, said all transactions with PNB were documented and allegations made by the Central Bureau of Investigation were completely wrong.

"Everything is documented," Aggarwal told Reuters over the phone.

Asked about his legal strategy, he said: "Until there is no chargesheet, there is no strategy. When there is a chargesheet, there will be a strategy."

Separately, Modi has accused Punjab National Bank of having "jeopardised" his ability to pay the bank back the dues — by making this case public, according to a report in business daily Economic Times which cited news agency PTI.

Nirav Modi reportedly wrote in a letter that his companies owe the bank under 50 billion rupees ($775.25 million) — much lower than the amount pegged by the bank.

Referring to the companies he own, Modi said in the letter: "The erroneously cited liability resulted in a media frenzy which led to immediate search and seizure of operations, and which in turn resulted in Firestar International and Firestar Diamond International effectively ceasing to be going-concerns."

"This thereby jeopardised our ability to discharge the dues of the group to the banks," he added, in a letter reportedly addressed to PNB's management.

Modi and his representatives were not immediately reachable for comment.

The fraud allegedly involved firms controlled by Modi and his relatives and sparked raids across Mumbai and New Delhi, targeting offices and homes linked to Modi.

Shares in PNB fell for the fifth straight day on Tuesday. The stock, which has shed more than a quarter of its market capitalization since disclosing the fraud, was down 3.5 percent in early trading.

- CNBC contributed to this report.