Antigua says it had sought updates on the probes against Choksi and received confirmation from Sebi that in one case, the matter had been closed, and indicating in the other that there is not sufficient evidence.
The Sebi (Securities and Exchange Board of India) has hit back at the Antiguan government’s claim that fugitive diamond merchant Mehul Choksi was given a “positive report” by the market regulator in 2017. Sebi has said that it was never approached by the Antiguan government in the first place. The row emerged after an Antiguan newspaper said its government’s Citizenship by Investment Unit (CIU) issued a press statement, saying Sebi provided a “positive report” when asked about Mehul Choksi in 2017.
Choksi and his partner Nirav Modi, who owns Firestar Diamond, have been accused of perpetrating the biggest banking fraud in India.
The CIU said it received the documentation of the two instances in which Sebi had opened investigations on a corporate entity owned by Choksi in 2014 and 2017. “We requested updates on the status of the investigations and received documentary confirmation, issued by the Sebi stating that in one case, the matter had been satisfactorily closed, and indicating in the other that there is not sufficient evidence to pursue the matter further,” said the release.
However, Sebi has issued a clarification saying it “neither received any request from the Citizenship by Investment Unit (CIU) of Antigua for updates on any investigation nor provided any such information to CIU”.
On checking the CIU website of Antigua, it was found that no “press release” was issued by the agency on its platform. In fact, on checking the Sebi website, it was found that Sebi independent director S Raman had ordered a prima-facie investigation against Choksi’s Gitanjali Gems between July 18, 2011, and January 25, 2012, six months before Gitanjali was stopped from trading.
Sebi had also issued a show-cause notice on October 26, 2012, and sought replies from Choksi and other Gitanjali promoters for manipulative trading and violating the Sebi regulations. Thereafter, his companies were barred from trading (directly and indirectly) in the stock market.
The entities in question were Mehul Choksi, (late) Guniyal Choksi, Partha Gems LLP, Priyanka Gems Pvt Ltd, Rohan Diamond Pvt Ltd, Mozarat Investments Pvt Ltd, Digico Holdings Ltd. All of them were the promoters of Gitanjali Gems.
Other 15 companies entities in question were Albers Diamonds Pvt Ltd, Ashlesha Trading Pvt Ltd, Avtar Gems Pvt Ltd, Jaiwanti Mercantiles Pvt Ltd, Magnifique Gems Pvt Ltd, Manoj Madhav Vankar, Rakesh Kumar Gupta/Ashlesha Trading Pvt Ltd, Rhoda Infrastructure Pvt Ltd, Rishabh Technomarine Pvt Ltd, Sadhiv Mercantile Pvt Ltd, Sancheti Properties Pvt Ltd, Shraddha Garments Pvt Ltd, Sneaking Infrastructure Pvt Ltd, Vankars Gems and Jewelleries Pvt Ltd, Sanskar Gems Pvt Ltd and Pinky Agro Foods Pvt Ltd. All of them were trading in the Gitanjali Gems script.
In its initial investigation, Sebi found that these 15 entities, which traded or funded transactions in the Gitanjali Gems scripts, were linked with the Choksis and other Gitanjali Gems promoters through common phone numbers, residential addresses, emails, inter-transfer of funds, etc. Also, these entities were trading only in Gitanjali Gems.
Sebi also suspected that Choksi’s other companies were periodically rolling money between different companies with a select set of foreign institutional investors (FIIs).
The regulator found that the disclosures made by Gitanjali Gems to the Bombay Stock Exchange (BSE) regarding the shares pledged by the Promoter and Promoter Group between September and December 2011 were found to be different from those obtained by Sebi from the depositories.
After hearing the views of the Gitanjali Gems promoters, S Raman had directed the regulator to probe the alleged manipulative trading in the scripts of Gitanjali Gems, along with the violations of takeover regulations, on March 10, 2017.
