Mehul Choksi plays catch me if you can

Even as the news around the arrest of fugitive jeweller Mehul Chinubhai Choksi—the erstwhile owner of Gitanjali Gems—made headlines, the theories on why and how he fled Antigua where he has supposedly been hiding for the past two years come under scrutiny for their timing.

Choksi, 62, and his nephew Nirav Modi are accused of siphoning off at least ₹13,500 crore from state-run Punjab National Bank using fraudulent letters of undertaking and circular transactions that involved layers of shell companies across the world . While Modi was picked up in London and remains in a jail awaiting extradition there, his uncle has been free albeit in the West Indies as he resists extradition and returning to India.

Recent news developments show that he had been living in Antigua, where he had secured a passport, after escaping India before the fraud came to light. He is one of the main defendants in the PNB fraud case.

Recently, it was first reported by international news agencies that he had gone missing in Antigua. He was soon found in Dominica. Courts in Dominica, which is around 190 km from Antigua, have now restrained local authorities from removing Choksi from the country, setting up yet another hurdle to India’s attempts to have him brought home and tried in India’s largest bank fraud case.

Manavendra Mishra, partner at Khaitan & Co who handles white-collar crime matters said, “It’s a tricky scenario for the extradition, as Dominica’s courts have passed an interim order refusing to remove Choksi till further orders. It will be interesting to see if India via Interpol gets an order for the deportation, in light of Antiguan authorities consenting to the same.” Dominica does not even have an Indian consulate and the Port of Spain office oversees consular relations in the region, he added. Whilst there are 13 independent countries in the West Indies region, Trinidad and Tobago is the only one to have a diplomatic mission (high commission) at Port of Spain. This is key because Choksi could potentially apply to any of the other countries for residency.

Legal experts who know and understand the case say that the very reason Choksi chose Antigua is because extradition is not easy and he had that on his list of research. What Choksi can do is possibly lose in Antigua but if he goes to other smaller nations in the West Indies, then he can effectively keep resetting the button on his charges and postponing his return. Sarosh Zaiwalla, a senior solicitor in England, said “It’s not uncommon for smaller countries in the West Indies to bank on wealthy ultra high net worth clients for a revenue stream in exchange for residency that is 'hassle-free’ and also allows them international access to dozens of other countries in the western world.”

While Nirav Modi remains in jail in England, insiders from the Palanpuri Jain community—to which the diamantaire and jeweller belong—say Choksi has been receiving visitors from India, both friends and relatives, on a regular basis. He is also on regular WhatsApp and video chats but constantly changes his telephones and replaces his SIM card every week or 10 days, according to sources.

His continued response is that he hasn’t siphoned off funds and that any misappropriation is on the part of PNB and other associated banks and officials.

But Choksi had run-ins that spelt trouble well before he left India or the PNB fiasco erupted. He had also been drawn into a securities scam which is being investigated by the Enforcement Directorate and the Securities and Exchange Board of India (Sebi). At one stage his company Gitanjali Gems, which was publicly traded, was chalking up revenues of as much as ₹16,500 crore (in 2013).

Sebi and the NSE have been investigating the alleged involvement of Choksi in rigging his shares in collusion with a Mumbai brokerage, Prime Securities, and two dozen entities that traded in Gitanjali shares.

When Choksi was asked by this writer about the status of the fraud and his involvement at the time the scam with PNB broke, his answer via WhatsApp was “Yes, it’s a mistake as I was never partner to those companies and its [been] 25 years when I was partner in Diamonds R Us and exited in 1999. I believe they must have picked up the old KYC.”

His old school friend and former jeweller Atul Merchant says that the buzz in Mumbai’s Palanpuri circles is that Choksi is constantly complaining about how India is a sub-optimal country and he has no faith in its systems and judiciary.

Choksi, who once weighed over 120 kg, according to Merchant who is in touch with friends of the jeweller, has been on an intense weight loss programme and now weighs around 84 kg. “He’s much fitter now than he ever was. In the past he also had heart surgery for cardiac stents in New York City after he had fled from India, before settling in Antigua,” said Merchant.

Other jewellers say that officially, Choksi is divorced from his wife Preeti AKA Pinky who was born in London and has a British passport, but continues to live with her. Divorce specialists say that one reason why Choksi separated from his wife on paper could be that if he had passed on to his wife assets that had originally come from fraudulent sources, then it would be irretrievable.

Meanwhile, his business is still continuing with trade operating between China and Hong Kong, according to sources. He continues to supply to the U.S. markets and is outsourcing to China using a front man called “Tony”, the sources add.

Others who are familiar with both uncle and nephew say that Nirav Modi had also visited Antigua but found the place too placid for business and preferred a vibrant and international financial centre like London which was also closer to Belgium, where he grew up.

Vijay Agarwal, who is the legal representative for Nirav Modi and also now of Choksi, did not return calls or messages as of Friday afternoon.

Merchant is of the opinion that it will be difficult to bring Choksi back because his modus operandi is built on selecting countries which have complex or sketchy extradition treaties with India. What this means is if he is losing case proceedings in one nation, he moves to another country and the Indian laws and proceedings would have to start all over again.

The Caribbean islands are best suited for such travel because all it involves is moving from one little island to another and being able to effectively shift new passport status and residence within a matter of hours.“The chase is far from over and it’s highly unlikely Choksi will be back anytime soon,” says Merchant.