PNB Bank Fraud: Enforcement Directorate Arrests Close Associate of Nirav Modi, Shyam Sunder Wadhwa

Mumbai, March 28: The ED today said it has arrested a "close" associate and the vice president of a firm of diamantaire Nirav Modi for allegedly aiding in the laundering of over Rs 5,900 crore in connection with the PNB bank scam case. Shyam Sunder Wadhwa, the vice president of the Firestar group, was arrested last night under the Prevention of Money Laundering Act (PMLA) in Mumbai, the Enforcement Directorate said in a statement.

A special anti-money laundering court in Mumbai today sent Wadhwa, a chartered accountant, to the seven-day custody of the ED. "Wadhwa is remanded in ED custody till April 3," said judge M S Azmi. He was described by the central probe agency as a "close confidant" of Modi.

"He is in close touch with Modi and also involved in money laundering at the behest of and in aid of Modi," an official said. This is the ED's first arrest in the case. The ED claimed Wadhwa was instrumental in setting up two companies in Hong Kong (Ms. Aura Gem and Ms. Sino Traders) along with "dummy" directors and these firms "were used" for laundering proceed of crime and substantial amounts totaling Rs 5,921 crore.

These funds were routed from the LOUs (Letters of Undertaking) "fraudulently" issued by the PNB for the Nirav Modi group of companies-- Ms. Solar Exports, Ms. Stellar Diamonds, and Ms. Diamonds R US, it said. "Out of the funds so received, Ms. Aura Gem has transferred an amount of Rs 468 crore and Ms. Sino Traders Rs 506.69 crore to the said three companies and completed the process of laundering money," it said.

The agency said Wadhwa's custodial interrogation would help it in "unravelling the truth behind the scam". It alleged that he was trying to initially "mislead" the agency during interrogation but later confessed to doing the paperwork for creating the two firms and appointing "dummy" or fake directors in them.

The central probe agency has filed two money laundering FIRs against Modi and his uncle and Gitanjali Gems promoter Mehul Choksi to probe the alleged over Rs 13,000 crore fraud in the Punjab National Bank (PNB). It has conducted a total of 251 country-wide searches in the case after it began the criminal probe against the accused in February. The total seizure and attachment of diamond, gold, precious and semi-precious stones and other movable and immovable assets in the case stand at Rs 7,664 crore.