In a major breakthrough for the Central Bureau of Investigation (CBI) in the Winsome Diamond bank fraud case, the investigation agency has arrested the former director of Forever Diamonds Hasmukh Shah.
Winsome Diamond and Forever Diamonds have collectively taken loans of around Rs 7,000 crore from banks.
The CBI had registered a case against Winsome Diamond in April 2017. As per CBI sources, “Hasmukh Shah was the authorized signatory of Forever Precious Jewellery and Diamonds. And Shah was a confidante of Jatin Mehta promoter of Winsome Diamond.
Another source involved in the investigation told Moneycontrol, “Shah’s arrest is impactful in this case and he could reveal the connivance between bank officials and company officials. Since he was indulged in dealing with the bank to procure loans and issue letters of credit for the company.”
Winsome Diamond owes Rs 4,680.04 crore to a consortium of lenders led by Standard Chartered Bank. An associate company of Winsome, Forever Diamonds owes Rs 2,121.82 crore to a consortium led by Punjab National Bank (PNB).
The CBI’s investigations had shockingly revealed that Punjab National Bank loaned up to Rs 16,00 crore to Forever Diamonds against collateral of only Rs 250 crore.
CBI has already recorded statements of PNB’s executive committee that sanctioned the loan.
“More than 50 percent of Winsome’s exports are to 6 companies with a common owner. Bankers should have looked into this aspect before sanctioning the loans,” the source said.
Meanwhile, Winsome promoter Jatin Mehta had previously told banks that his major clients had defaulted on payments, in turn, making it difficult for his company to repay the loans.
However, investigations revealed that customers to whom Winsome was exporting had been incorporated as recently as 2012. It is suspected that Mehta may have siphoned off the money using fictitious customers and stashed the money in foreign banks.
In 2015, both companies filed cases in the Sharjah Federal Court arguing that they had suffered losses to the tune of USD 1 billion due to non-payment from 13 UAE-based entities. The Sharjah court ruled in favour of the companies.
In May 2017, UAE’s Appellate Court upheld the Sharjah court’s verdict.
Subsequently, the ED attached properties of the Winsome Diamond worth of Rs 172 crore.