Editors

Nirav Modi Case Is ‘Another Nail in the Coffin’

EditorsFeb 23, 2018

Nirav Modi Case Is ‘Another Nail in the Coffin’

A banker talks about what the billion-dollar bank fraud allegations against Indian diamantaire Nirav Modi mean for the industry as a whole.

20171110_NiravModi1.jpg
A rendering of the Nirav Modi store at the Wynn Las Vegas, which opened in November. It is one of three stores the billionaire Indian diamantaire, who is accused in a billion-dollar bank fraud, has in the United States.

You’ve likely the seen the name Nirav Modi a lot in recent years, perhaps in one of the many stories about him supplying high-profile actresses with amazing pieces to wear on the red carpet, like the earrings Yvonne Strahovski wore to the SAG Awards.  He even won an award from Town & Country earlier this year for one of his red carpet looks.

Or maybe it was in one of the stories about the opening of yet another opulent store that bears his name. There has been a Nirav Modi store on Madison Avenue in New York since 2015 but last year, the brand opened two more stores in the same month, one in the Wynn hotel in Las Vegas and the other at the Ala Moana Center in Honolulu.

More recently, however, you might have seen Modi’s name in stories of a very different sort, ones that signal that the billionaire, much like Strahovski’s character in “The Handmaid’s Tale,” could end up living a future very different from the one you might have imagined.

Last week, news broke in India that Modi and his uncle, Gitanjali Managing Director Mehul Choksi, have been accused of colluding with employees of Punjab National Bank to swindle the second-largest state-owned financial institution out of about $1.8 billion.

Here’s the story so far, according to multiple news reports on the scam, which has been making headlines in India and worldwide and has generated hashtags like #FindingNiMo, a portmanteau referencing the ongoing search for the diamantaire, who has left India.  

WATCH: The Bank Fraud Case in Five Minutes


On Jan. 29, India’s Central Bureau of Investigation (CBI) registered a case against Modi, his brother Neeshal, and Choksi.

They are accused of colluding with Punjab National Bank employees to have Letters of Understanding, or LoUs, issued to banks in Hong Kong in order to secure massive loans. LoUs are sent from one bank to another and basically say: Please loan this individual or company money for this purpose (in Modi’s case, for buying diamonds) for a specified period of time; we will be responsible for repaying you.

On the surface, there is nothing wrong or illegal about an LoU. What is problematic in this case, however, is that the LoUs were issued by PNB without proper authorization and/or oversight, and more importantly, the money was never used to pay for the diamonds.

Modi, through his attorney, has denied the allegations and hit back at the bank in a letter, claiming the amount he owes is much less, and that the publicity surrounding the case has damaged his businesses and, along with it, the bank’s ability to recover money. His businesses include Firestar International, which owns a company called Sandberg & Sikorski, better known to retailers as A. Jaffe. 

Choksi also denied his involvement through a regulatory filing made by Gitanjali, which, it is worth noting, owns Samuels Jewelers in the U.S.

I don’t want to rehash every development in this case, as it’s been widely covered by many media outlets closer to the situation with greater resources and contacts on the ground in India.

What I do want to focus on is what this case means for the diamond industry as a whole in terms of bank financing specifically; in other words, why it matters.

I spent a long time on the phone Thursday with an industry banker (who asked that his name be withheld) and asked him to help me find an apt idiom to describe this situation.

Can we say, to use a well-worn one, that this is “the straw that broke the camel’s back” when it comes to the diamond industry and financing?

No, he told me, because that camel’s already wearing a brace and taking painkillers. “This,” he said, “is just another really bad week for the camel,” or, to employ one more, it’s “just another nail in the coffin.” 

“It’s not the end of the world,” he allows. “But it is another stamp, another demerit that says, ‘Just stay away from this thing. Don’t go anywhere near it. It’s not reliable. Why would you want to do business with these people?’”

Consider cases such as M. Fabrikant & Sons, W.B. David & Co. and Winsome Diamonds, and the subsequent withdrawal of banks from the industry, one by one, like gamblers folding in a game of cards: Antwerp Diamond Bank, Bank Leumi and Standard Chartered.

Regulations have only gotten tighter, the industry hasn’t evolved enough to keep up and banks, as I wrote back in June 2016 when analyzing the exit of Standard Chartered, simply see too much risk for too little reward. 

“It's no longer a special club for men where you get to make nice to De Beers and you get your box of diamonds and everything stays behind closed doors,” the banker observed.

And yet, here we are.

The latest industry scandal will, presumably, make those few banks that are still financing the diamond industry pipeline even more vigilant and stringent about lending money, while giving those that aren’t involved another reason to stay out of it.

And it’s not going to be something the banks forget about in a year, or even five, my source said.

He said what’s going on in the industry with banks right now is a substantial change, a generational change that’s going to have effects in the short-term, yes, but also will be impacting how the diamond industry does business 30 or 40 years down the road.

“When you put bankers off of an industry, it’s going to take a while, at least a couple of decades,” to get them back on board, he said.

“Somebody has to figure out how to make these companies transparent, truly transparent, how to adopt it and how to test themselves.”

Are Consumers Following This Story?
What about consumer confidence in diamonds and the industry as a whole?

On Thursday morning, I arrived at work to find in my inbox a link to this column by Indian journalist Vinod Kuriyan, the chief editor of GEMKonnect and a highly respected colleague whom I’ve known for years.

Kuriyan linked to an article published that same day by the Times of India that indicates that the scope of the fraud extends beyond bank loans to include diamond companies in Surat setting the jewelry Modi and Choksi sold via their brands in the United Arab Emirates and Hong Kong with low-quality goods and, in some cases, man-made diamonds being sold as natural.

(The article does not say anything about any of the jewelry coming to the United States, and it is also worth noting that this Times of India article quotes an individual who said that there are no machines that can detect lab-grown diamonds once they are set in jewelry, which is incorrect.)

Kuriyan called the development a “knockout punch” as far as consumer confidence goes.

I don’t know if I’d go that far, but it will be interesting to see how this case develops in the coming weeks and months, as Mr. Kuriyan, who certainly understands the situation in India, notes that what started as a case of bank fraud is “snowballing into something much bigger.”
Michelle Graffis the editor-in-chief at National Jeweler, directing the publication’s coverage both online and in print.

The Latest

Bergman Jewelers family
IndependentsApr 01, 2025
Bergman Jewelers in Omaha Closing After 137 Years

The independent jeweler first opened its doors in 1888.

QVC Group Inc. logo
MajorsApr 01, 2025
QVC Group to Cut 900 Jobs in the U.S.

The layoffs come amid the TV shopping channel’s efforts to restructure and focus on live shopping through social media.

Coconut Grove Jewelry & Watch Show
Events & AwardsApr 01, 2025
U.S. Antique Shows Adds Fall Show in Florida

The debut event will take place in Miami’s Coconut Grove neighborhood this fall.

bench jeweler 1872x1052.png
Brought to you by
The Heart of the Industry: Giving Bench Jewelers the Recognition They Deserve

Bench jewelers spend years honing their skills, Jewelers of America’s Certification validates their talents.

The Jewelry Symposium (TJS)
Events & AwardsApr 01, 2025
TJS to Host Discussion on Jewelry Industry’s Labor Shortage

The roundtable will take place May 17 ahead of the trade show’s welcome dinner.

Weekly QuizMar 27, 2025
This Week’s Quiz
Test your jewelry news knowledge by answering these questions.
Take the Quiz
Peanuts x Monica Rich Kosann Collection Bracelets
CollectionsApr 01, 2025
Monica Rich Kosann Says ‘Good Grief’ in Peanuts Jewelry Collection

The “Peanuts x Monica Rich Kosann” collection features the comic strip’s classic vocabulary across 10 bracelet designs.

Graphic for What Do We Mean When We Say “Recycled” Gold webinar
Recorded WebinarsMar 31, 2025
Watch: What Do We Mean When We Say ‘Recycled’ Gold?

Three industry experts dive into the complexities of the material often marketed as an “ethical” alternative for metal in jewelry.

Facets-of-Fire-Difference-You-Can-See.jpg
Brought to you by
Natural Diamonds Should Mean More

Natural diamonds mean more than lab-grown, but when every cut is ideal, they all look the same. Customers want more—Facets of Fire delivers.

Mindi Mond Clarity Earrings
TrendsMar 31, 2025
Amanda’s Style File: Dripping in Diamonds

Diamonds are not only one of the most prominent gemstones, but the birthstone for those born in April.

Lashbrook ring
MajorsMar 31, 2025
Lashbrook Expands Into Luxury Golf Gifts With Acquisition

The Utah-based company known for making wedding bands has acquired Doubloon Golf.

Bulgari and LVMH Watches CEO Jean-Christophe Babin
WatchesMar 31, 2025
Bulgari CEO Jean-Christophe Babin Will Also Head LVMH Watches

The longtime luxury executive led one of LVMH’s watch brands, TAG Heuer, for 12 years before taking over Bulgari in 2013.

Surveillance footage of robbery
CrimeMar 28, 2025
2 Suspects Arrested in $1.7M Smash-and-Grab Robbery of NY Jewelry Store

Authorities said the robbers fled with jewelry and 70 Rolex watches, later taking pictures of themselves posing with big stacks of cash.

Nephrite and Jadeite by Heinrich Fischer, Richard W. Hughes
SourcingMar 28, 2025
19th-Century Jade Book Now Available in English

Lotus Gemology founder Richard W. Hughes has translated Heinrich Fischer’s 1880 book “Nephrit und Jadeit” from its original German.

LÖF The Valentine Ring
CollectionsMar 28, 2025
Piece of the Week: Löf’s ‘The Valentine’ Ring

The ring's design features contrasting lines influenced by work from architecture-inspired photographer Nikola Olic.

Eggs on a shelf
SurveysMar 27, 2025
Consumer Confidence Falls in March Amid ‘Gloomy’ Outlook

The Conference Board’s index fell as consumers continued to worry about the impact of tariffs, the labor market, and the price of eggs.

Richard Rainsford memorial ring
AuctionsMar 27, 2025
300-Year-Old Ring Linked to Witch Trial Judge Goes Unsold at Auction

However, two medieval jewels surpassed estimates at Noonans Mayfair’s recent jewelry auction in London.

Austin Butler
WatchesMar 27, 2025
Austin Butler Joins Breitling as Brand Ambassador

The Oscar-nominated actor debuted in the campaign for the new “Top Time B31” collection, which introduced Breitling’s Caliber B31.

ICA Congress Brazil 2025
SourcingMar 27, 2025
Susan Jacques, Gaetano Cavalieri to Headline 2025 ICA Congress

The Congress is scheduled to take place May 19-22 in Brasilia, Brazil.

Bailey’s Fine Jewelry storefront
IndependentsMar 26, 2025
Bailey’s Fine Jewelry Acquires Fellow NC Independent Jeweler

The family-owned retailer is the new owner of Morrison Smith Jewelers in Charlotte, North Carolina.

Bulova 150 Art Deco Miss America Watch, 150 Art Deco Pocket Watch
WatchesMar 26, 2025
Bulova Celebrates 150th Anniversary With Art Deco Watches

The “150 Art Deco” collection features a Miss America timepiece and a pocket watch from the brand’s Archive Series.

Alex Wellen
MajorsMar 26, 2025
QVC Group Appoints New President

Alex Wellen, formerly CEO and president of MotorTrend Group, has taken on the role.

Jewelers of America’s new logo
Events & AwardsMar 26, 2025
Jewelers of America Announces New Funding Initiative

The Impact Initiative is part of the nonprofit association’s new three-year strategic plan.

Christies regent kashmir sapphire and regal Burmese ruby
AuctionsMar 25, 2025
Christie’s To Auction 35-Carat Sapphire, 13-Carat Ruby

The ruby and the sapphire, which Christie’s calls a “once-in-a-generation masterpiece,” are part of the upcoming Hong Kong jewelry auction.

Diamond earrings held in gloved hand
CrimeMar 25, 2025
Tiffany & Co. Earrings Swallowed Following Grab-and-Run Theft Recovered

The two pairs of earrings, snatched from a Tiffany & Co. store in Orlando, Florida, are valued at a combined $769,500.

Emmanuel Raheb CEO of Smart Age Solutions
ColumnistsMar 25, 2025
The Smart Lab: Using Short-Form Videos to Sell More Jewelry

The time to start experimenting with video content is now, writes columnist Emmanuel Raheb.

Pomellato Nudo High Jewelry Campaign
CollectionsMar 24, 2025
Pomellato’s Latest ‘Nudo’ Collections Revamp its Classic Design

From striking high jewelry to miniature fine jewelry, the new chapter continues to highlight gemstones featuring its signature 57-facet cut.

Jamie Singleton, Bill Brace, Rebecca Wooters, Bill Luth
MajorsMar 24, 2025
4 Top Executives to Depart Signet Jewelers Amid Turnaround

The jewelry giant is reducing its senior leadership by 30 percent as part of its new turnaround strategy.

×

This site uses cookies to give you the best online experience. By continuing to use & browse this site, we assume you agree to our Privacy Policy