Newsmaker: India's jeweller to Hollywood stars, now accused of massive bank fraud

Gitanjali Gems

15/02/2018 17:50

* Federal investigators searching for jeweller 
    * Modi has yet to respond to fraud allegations 
    * His firm Firestar Diamond says has no involvement 
    * Movie stars now swathed in Mumbai-based Modi's jewels 
 
 (Adds statement from Priyanka Chopra spokesperson) 
    By Rajendra Jadhav, Rupam  Jain and Tom Lasseter 
    MUMBAI/NEW DELHI Feb 15 (Reuters) - Nirav Modi's name is a 
stamp of corporate India's growing global prestige. On Hollywood 
red carpets, his diamonds have sparkled on the necklines and 
dangled from the earlobes of actors and models like Kate 
Winslet, Dakota Johnson and Rosie Huntington-Whiteley. 
    Back in India, billboards above the traffic jams of New 
Delhi bear the image of Priyanka Chopra, a Bollywood star and 
former Miss World who is fast becoming a household name in the 
United States, also adorned with Modi's jewels. 
    But on Thursday, officials at the nation's federal 
investigative agency announced it was looking for Modi as law 
enforcement officials fanned out to raid his jewellery stores 
and other businesses in Mumbai and New Delhi.  
    Central Bureau of Investigation (CBI) officials told 
reporters the agency had on Feb. 4 issued a lookout circular in 
the country for Modi, who they say had left four weeks earlier.  
    Modi, who has a net worth of some $1.8 billion according to 
Forbes magazine rankings, has not yet responded to the 
allegations and could not be reached for comment. 
    His flagship company, Firestar Diamond, has said it had no 
involvement in the case. 
    The setback in Modi's climb to fame and fortune was abrupt, 
even by the rough-and-tumble standards of one of the world's 
fastest growing major economies. 
    During an interview with Reuters in November, the famously 
soft-spoken Modi discussed his love for art, poetry and 
paintings. He also spoke of his wife and three children with 
whom he lives in central Mumbai. 
    Asked how he planned to raise funds to add new stores, he 
seemed unconcerned. 
    "All options are open," he said, sitting in his cavernous 
Mumbai office. "We could use internal accruals. We can take 
loans from banks or we could do an initial public offering." 
    But last month, India's second-largest state-run lender 
filed a criminal complaint with the CBI that accused Modi and 
others of defrauding the bank and causing it a loss of 2.8 
billion rupees ($43.8 million). 
    Then on Thursday, the same bank, Punjab National Bank 
 PNBK.NS , publicly alleged that Modi was involved with a much 
larger fraud case: $1.77 billion from a single branch stretching 
back to 2011. 
     
    "HAUT DIAMANTAIRE" 
    The news was a shock for the circles in which Modi moved. 
    As recently as last month, he was at the World Economic 
Forum in Davos. Indian media carried a group photograph with 
Prime Minister Narendra Modi in the foreground and Nirav Modi, 
who is no relation, grinning between rows of Indian business 
leaders behind him. 
    "Top industrialists invited him home to display his 
collections," said a Mumbai investment banker at a U.S.-based 
firm who has worked directly with Modi's company. "There was a 
personal touch in everything he sold. Nirav Modi is a brand." 
    A senior member at Bharat Diamond Bourse, a Mumbai-based 
industry body with more than 13,000 members, sketched a similar 
profile of Modi. 
    "In one of the industry meetings in 2013 he said that when 
people wear a Cartier ring they don't say it's a diamond ring, 
they say it's Cartier," said the member, who did not want to be 
named. "He always wanted people to say they are 'wearing Nirav 
Modi'." 
    Modi grew up in Antwerp, Belgium, in a diamond-dealing 
family. In 1990, at the age of 19, he moved to Mumbai, according 
to the November interview. 
    Nine years later, Modi started his own company, Firestar 
Diamond Ltd., selling loose stones. He employed fewer than a 
dozen people at the time. By last year, the number was more than 
2,000. 
    He said he came to realise the margins were better in 
retail. 
    Firestar Group, the parent company Modi controls as a 
majority shareholder, saw its revenue grow over three years from 
103 billion rupees (about $1.6 billion at current rates) to some 
147 billion rupees ($2.3 billion) by the 2016-17 fiscal year, 
according to figures previously provided by the company. 
    In 2010, Modi launched an eponymous jewellery business 
branded NIRAV MODI, in capitals, with the tagline "Haut 
Diamantaire". New boutiques in Las Vegas and Hawaii have since 
been added to a stable that stretches from New York to London to 
Beijing. 
    He became a man whose diamond necklaces were sold, with his 
name attached, by Sotheby's. "Pure feminine elegance," says a 
Hong Kong auction catalogue note of one 85.33 carat diamond 
necklace. 
    The auction house posted an online slideshow of 
jewellery-on-stars at the 2017 Oscars and highlighted supermodel 
Karlie Kloss having "a major Nirav Modi moment with her diamond 
'Mughal' choker." 
    But the celebrity links could be starting to break. 
    A spokesperson for Chopra, the film star, said in a 
statement: "She is currently seeking legal opinion with respect 
to terminating her contract with the brand in light of 
allegations of financial fraud against Nirav Modi." 
 
 (Reporting by Rajendra Jadhav, Rupam Jain and Tom Lasseter; 
Additional reporting by Aditya Kalra and Krishna N. Das in New 
Delhi; Writing by Tom Lasseter; Editing by Alex Richardson and 
Edmund Blair) 
 ((rajendra.jadhav@thomsonreuters.com; +91-22-6180-7153 ; 
Reuters Messaging: 
rajendra.jadhav.thomsonreuters.com@reuters.net)) 
 
Keywords: PUNJAB NATL BANK FRAUD/MODI (NEWSMAKER, UPDATE 1