International police organisation Interpol has issued a Red Corner notice against absconded billionaire diamond trader Mehul Choksi who is accused of cheating state-run Punjab National Bank (PNB), allegedly in collusion with his nephew, celebrity jeweller, Nirav Modi.

Investigators claim they fraudulently used letters of credit (L/Cs) and letters of understanding (LoUs) to obtain US$2 billion, making the fraud the biggest ever discovered in India.

Persecution claim

Interpol issued the notice against Choksi on the request of India's Central Bureau of Investigation after rejecting the billionaire's claims that he is being persecuted by Indian agencies and that the case is politically inspired.

A Red Corner Notice is a request from Interpol to member countries to locate and provisionally arrest an individual pending extradition.

L/C fraudChoksi, owner of Gitanjali Gems, absconded from India in January this year along with his nephew Nirav Modi, his wife Ami Modi and brother Nishal Modi and obtained citizenship in Antigua where they now reside.

Nirav Modi and Choksi through their companies allegedly obtained credit from overseas branches of Indian banks using guarantees on the back of fraudulent L/Cs and LoUs that were not repaid.

Instructions to transfer the funds were allegedly issued by a PNB employee using the SWIFT messaging platform without recording the same transfers on the bank's internal banking software, thereby bypassing its anti money laundering processes.

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