Mehul Choksi Arrested in Belgium: Unraveling the Rs 14,000-Crore PNB Scam
The arrest of Mehul Choksi, a key figure in one of India’s largest banking scams, has sent ripples through the financial world. Choksi, once the head of Gitanjali Group, a major jewelry firm, was detained in Belgium on April 12, 2025, following a request from Indian authorities, including the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED). His arrest is tied to his involvement in the notorious Punjab National Bank (PNB) fraud case, which is estimated at a staggering Rs 13,850 crore.
Who Is Mehul Choksi?
Mehul Choksi, born in 1959, is a former Indian businessman with deep roots in the diamond industry. He gained prominence as the owner of Gitanjali Group, which operated numerous jewelry brands. However, his reputation crumbled after his involvement in the PNB fraud came to light. Before the scam was uncovered, Choksi fled India in January 2018, initially seeking refuge in the United States, before obtaining citizenship in Antigua and Barbuda.
Since his departure, Indian authorities have been relentless in their pursuit of Choksi, aiming to bring him back to face trial for his role in the massive financial fraud.
The Punjab National Bank Scam: A Deeper Look
The PNB scam, which came to light in 2018, involved Mehul Choksi and his nephew Nirav Modi, both of whom were able to manipulate the banking system for personal gain. The fraud centered around the use of Letters of Undertaking (LoUs), a form of bank guarantee, to acquire short-term credit from foreign banks.
Between 2011 and 2018, Choksi and Modi used these LoUs without following proper procedures, with the help of a few complicit bank officials. These LoUs were not entered into the bank’s main system, allowing the fraud to go undetected for years. The money, which was ostensibly meant for importing goods, was never repaid and was instead used for personal and business expenses. In total, Choksi’s Gitanjali Group was responsible for approximately Rs 6,097 crore of the fraud, while Modi’s companies accounted for Rs 6,498 crore.
The Response from Indian Authorities
Once the scam was exposed, the CBI and ED sprang into action, filing criminal cases and launching investigations. Gitanjali Gems and related companies were shut down, and their assets were seized. The ED also discovered that a significant portion of the stolen funds had been transferred abroad using shell companies, which were designed to launder money and obscure the true origin of the funds.
In September 2024, Indian authorities, along with PNB and ICICI Bank, received permission from a Special PMLA Court to sell assets worth Rs 2,565 crore. These assets, belonging to the Gitanjali Group, were auctioned off, and the proceeds are being held in fixed deposits by the banks.
Priti Choksi’s Role in the Scam
Mehul Choksi’s wife, Priti Choksi, has also come under scrutiny for her involvement in the fraudulent activities. Reports indicate that she played an active role in hiding the illicit funds. In 2013, Priti, in collaboration with CD Shah of Magus Consultancy, established three offshore companies: Charing Cross Holdings Ltd, Colindale Holdings Ltd, and Hillingdon Holdings Ltd. These companies were based in jurisdictions where ownership records were difficult to trace.
Hillingdon Holdings, where Priti was named the Ultimate Beneficial Owner, later became the sole shareholder of Goldhawk DMCC, a company in the UAE. This company held three high-value properties in Dubai’s Almas Tower, worth over Rs 22.5 crore, which were allegedly purchased with money from the scam. The ED traced the funds through transactions made by Asian Diamonds and Jewellery FZE, a part of the Gitanjali Group. These properties were seized in 2019, but they remain under the name of the shell company, Diminico DMCC.
Conclusion
Mehul Choksi’s arrest marks a significant development in the fight against financial fraud in India. His involvement in the Rs 13,850 crore PNB scam has not only led to financial losses but has also sparked a broader investigation into money laundering and banking malpractices. As Indian authorities continue their efforts to bring Choksi and others to justice, the case serves as a reminder of the far-reaching consequences of financial crime and the importance of vigilance in the banking system.