Fugitive Indian diamond tycoon Mehul Choksi was arrested on Saturday in Antwerp, Belgium, following an extradition request from Indian authorities. Choksi is accused of orchestrating a US$1.8 billion fraud involving Punjab National Bank (PNB), alongside his nephew, Nirav Modi.

The alleged scheme involved the use of fraudulent letters of credit (L/Cs) to secure substantial loans, with funds reportedly diverted to purchase luxury assets and transferred to relatives accounts.

Fraud allegations

Choksi, along with his nephew Nirav Modi, allegedly secured fraudulent letters of undertaking (LoUs) and L/Cs from PNB employees without appropriate collateral or documentation.

Bank officials at PNB's Brady House branch in Mumbai fraudulently issued these L/Cs through the SWIFT bank messaging system without recording them in the bank's core banking software, effectively hiding the transactions.

Diversion of funds

The fraudulent L/Cs and LoUs were used to secure substantial loans from overseas branches of Indian banks, purportedly to finance the import of jewellery.

However, the money was diverted to overseas shell companies controlled by Choksi and Modi, primarily for personal enrichment.

Flight from India

After fleeing India in 2018, Choksi initially settled in Antigua and Barbuda, where he obtained citizenship. He later relocated to Belgium, reportedly for medical treatment.

Choksi's arrest in Antwerp, a major global diamond trading hub, was confirmed by Belgian authorities, who stated that he is being detained pending further judicial proceedings. ​

Indian agencies, including the Central Bureau of Investigation and the Enforcement Directorate, have initiated the extradition process, with officials preparing to travel to Belgium to coordinate legal procedures.

Plans to appeal

Choksi's legal team plans to appeal the arrest, citing his health condition, reportedly undergoing cancer treatment, and arguing that he is not a flight risk. They also contend that the case is politically motivated and express concerns about the conditions in Indian prisons.

Meanwhile, Nirav Modi remains in custody in the UK, contesting extradition to India. Both men have denied the allegations against them.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.