Billionaire jeweller Nirav Modi arrested in London

Jewellery dresser to the stars is wanted over huge Indian bank fraud

Indian supporters of the Congress Party shout slogans against billionaire jeweller Nirav Modi during a protest in New Delhi on February 16, 2018. 
Indian investigators on February 15 raided the premises of a billionaire jeweller accused of defrauding one of the country's biggest banks. Enforcement Directorate (ED) officers searched the Mumbai offices of Nirav Modi after he was accused of cheating state-owned Punjab National Bank (PNB) of 2.8 billion rupees ($43.8 million). / AFP PHOTO / CHANDAN KHANNA
Powered by automated translation

High society jeweller Nirav Modi was detained in custody on Wednesday over his alleged role in a $2 billion Indian financial fraud after his 15 months as a fugitive were cut short when he tried to open a bank account in London.

Mr Modi, 48, whose gems have adorned screen stars including Priyanka Chopra and Kate Winslet, was arrested by British police on Tuesday following a request by Indian authorities investigating the alleged fraud at the state-run Punjab National Bank (PNB).

A judge denied Mr Modi bail because of the "substantial risk" that he would flee the UK before any extradition hearing took place. He is accused of fraudulently securing guarantees from the bank that were used to obtain loans from abroad.

UK police confirmed the arrest on Tuesday of Mr Modi in the London district of Holborn after he was pictured earlier this month in a British newspaper walking nearby with his dog.

A court heard on Wednesday that a member of bank staff alerted the authorities when he tried to open an account because his assets were frozen in India.

"He very strongly contests the allegations," Mr Modi’s lawyer, George Hepburne Scott, told Westminster magistrates court. He said Mr Modi had been in touch with authorities to turn himself in next week.

Mr Modi was reported in June last year to have fled to Britain where he was claiming asylum from “political persecution”.

He was tracked down to a multi-million dollar three-bedroom flat in a prestigious tower block in central London by British newspaper the Daily Telegraph earlier this month. He declined to comment when confronted by reporters in the street.

Mr Modi is the second high-profile Indian businessman who is facing extradition to India from Britain over claims of financial misconduct.

The flamboyant businessman Vijay Mallya, 62, lost the first stage of an extradition battle in December over the collapse of his Kingfisher airline. He had also claimed that he was the victim of a political campaign but his claims were rejected by the same court. Mr Mallya has announced he will appeal and the case is expected to rumble on for months.

Mr Modi ran a chain of jewellery stores with outlets in major cities around the world and was ranked 85th on Forbes list of richest Indians in 2017, with a fortune worth $1.73bn.

Born into a Belgium-based diamond trading family, he opened his first luxury boutique in New Delhi in 2014 before embarking on a global expansion that included stores in London, Singapore and New York where a glitzy launch event was attended by Donald Trump jnr and his wife.

But his stock has plummeted as the scandal at India's second biggest state bank unravelled. Authorities have seized jewellery and gems, homes, frozen his bank accounts and impounded cars including a Rolls-Royce.

PNB said last year that two jewellery groups headed by Mr Modi and his uncle Mehul Choksi had defrauded it by raising credit from other banks using illegal guarantees issued by rogue staff at a branch in Mumbai over several years.

In a letter to Punjab National Bank last year, Mr Modi said he owed the institution about $775 million but claimed higher figures cited by the bank sparked a media frenzy that led to his assets being seized.

Indian authorities have tried to bring him back to India to stand trial and posted his details on an Interpol database of global fugitives. The notice said he was accused of charges including money laundering and corruption.

His lawyer argued that he had not evaded justice but had been living openly in the UK, paying council tax and was trying to get a driving licence.

Indian prime minister Narendra Modi has been battling to contain the political damage after some 31 Indians linked to fraud cases fled abroad to try to avoid persecution. The issue has emerged as a key theme on the campaign trail before elections next month.