Following week of high drama, Nirav Modi trial adjourned until September

By Poonam Joshi

London [UK], May 15 (ANI): The extradition trial of fugitive diamantaire Nirav Modi has been adjourned until September after a week of extraordinary drama at the Westminster Magistrate's Court in Central London.

Nirav Modi, wanted in India on the charges of fraud and money-laundering of an estimated Rs 11,000 crore, appeared from Wandsworth Prison in South London at the court this week via video link, due to the social distancing rules in place across the UK due to COVID-19.

The diamantaire's defence and, Britain's Crown Prosecution Service (CPS), which is acting on behalf of the Indian government, laid out their respective cases to establish whether there is a 'prima facie' case against the 49-year-old.

Proceedings began on Monday with the CPS laying out its case, arguing that Nirav Modi indulged "bribery, lies and threats" in obtaining loans and lines of credit - known as Letters of Understanding (LOU's) - from Punjab National Bank.

District Judge Mark Goozee was told that this was done in collusion with several members of the bank in Mumbai.

At the heart of the Indian government's case against Nirav Modi - filed by the Central Bureau of Investigation and the Enforcement Directorate - are the charges that he circumvented the strict conditions required to obtain LOU's and withheld commissions due on the loans to the Bank.

He is accused of essentially running a giant 'Ponzi Scheme' - by setting up various shell companies in Dubai, Hong Kong and elsewhere, obtaining LOU's from one company to pay off the phantom debts of another.

Nirav Modi's defence team - led by the barrister Clare Montgomery QC, who had represented the embattled liquor tycoon Vijay Mallya in his extradition case at the same court - disputed the Indian government's allegations, calling them "long on assertion and short on facts".

As in the case with Mallya, Montgomery questioned the veracity and authenticity of documents obtained by the Indian government and submitted as part of its case.

Montgomery also dismissed the 'ponzi scheme' allegation by pointing out that accounts of the companies allegedly involved in the fraud showed cash flows that went up and down as any company's would and they remained solvent throughout the period of the alleged fraud.

This, she claimed, showed that it was not a ponzi scheme as such a scheme would involve continually declining cash flows which would then have to be replenished by further loans.

Instead, she contended that the companies remained solvent and financially healthy until the PNB itself ceased extending them credit facilities. "These are losses created by PNB itself," Montgomery stated.

The court also heard from two world-renowned jewellery and gemmology experts as to Nirav Modi's character, business nous and the extraordinary growth enjoyed by the Nirav Modi jewellery brand prior to his arrest in March 2019 in London.

Thierry Fritsch, the former chief executive of the high-end French jewellery Chaumet who had become an advisor to Nirav Modi in 2015, told the court that Nirav Modi "combined entrepreneurship and creativity" and that he "never doubted his integrity".

He said that the Nirav Modi brand was the "first instance of a jewellery brand from India becoming an international success", so much so that "even brands like Cartier were worried".

Dr Richard Taylor, a veteran gemmologist, on Thursday told the court that the "speed of success of the brand was unprecedented", and can be attributed to the "business acumen and quality of Modi's brand".

"The biggest difference between Nirav Modi and his competitors was that he diversified the business into a number of different strands and created a vertically integrated business from the buying and cutting and polishing of gems to creating a world-renowned consumer retail brand", Taylor said.

However, the two most critical moments of the trial came on Tuesday when Nirav Modi's defence team introduced an Indian legal expert - the retired Mumbai High Court Justice Abhay Mahadeo Thipsay, who questioned the legal basis upon which the Indian government has requested his extradition to India to face charges.

At the heart of that request is that Nirav Modi and companies controlled by him had deceived PNB to issue Letters of Understanding (LOU) - to finance the expansion of his company.

Justice Thipsay, however, dismissed the charge.

"The position of the Indian government has been that there was deception. That PNB was deceived. But under Indian law, there has to be a victim who has been deceived. In this instance, a corporate body (PNB) has been deceived. If that is the case, then there has to be someone in the body whose actions were a response to the deception. But there is no one who has been deceived," Justice Thipsay said.

He also questioned the confessions and witness statements compiled against Nirav Modi, including the manner in which they were obtained and their very admissibility.

He said that Indian law provided strict conditions for admissibility, especially for statements and other evidence secured and submitted by police because of what he described as a deep-rooted "distrust of the police machinery".

Justice Thipsay's testimony was followed by a moment of high drama when the CPS introduced a video apparently recorded by several former employees of Nirav Modi.

The video - made on June 27, 2018 in Cairo - shows five men who claim that they were "low level" employees of the Nirav Modi organization who had been named as directors of numerous shell companies which had been used for to channel the funds obtained by PNB.

The men claim that they had been moved first to Dubai to take up what they described as the "namesake" executive positions. When the Indian government launched its investigation in 2018, the men say they were forcibly moved to Cairo, Egypt by Modi's step-brother Nehal who confiscated their passports and forced to sign confessions that would support Nirav Modi's innocence.

The men say their lives were threatened as well as their families and property in India and claim that they had finally relented and signed the documents "out of fear" and the desire to return to their homes in India.

The men also claim that their laptops and mobile phones were destroyed by Nehal Modi prior to their departure to Cairo, from Dubai.

One of the men is heard saying: "Nirav Modi called me and told me that he would implicate me for theft if I didn't cooperate. He had used the worst (sic) expletives...told me that he would get me killed...he did so much to us. This is the reason we have signed the documents we want to get out of here."

It is unclear where the men are at the moment or whether they managed to return to India safely.

Nirav Modi's trial will resume on September 7 with June 11 set as the date for him to be produced in court for his 28-day remand hearing.

"I hope Modi by the time we get to September, the current restrictions on movement from prisons have been eased and you can be in court in person to follow the proceedings," Judge Goozee told him.

"The situation is being kept under constant review as we react to the current pandemic," he said, in reference to the partly remote setting in which the case was heard this week due to the coronavirus lockdown. (ANI)