A US bankruptcy court-appointed examiner has begun the much-awaited investigation into the over $2-billion fraud involving now fugitive diamantaire Nirav Modi and some employees of Punjab National Bank (PNB).
The examiner, John J Carney, and his counsel have already held telephonic meetings with counsel for Modi-owned Firestar Diamond's debtors-- HSBC Bank USA, Israeli Discount Bank of New York, PNB-- the Indian Ministry of Corporate Affairs and the Office of the United States Trustee, a court document said.
The probe findings are important because they may contain vital pieces of information on how billionaire Modi's now bankrupt company Firestar Diamond Inc played a role in the flow of money linked to India's largest banking fraud case. The examiner will have to determine to what extent the Modi entities have the ability to influence the actions taken by Firestar, which had filed for bankruptcy protection in America soon after the banking fraud came to light in India.
The US examiner's preliminary discussions with the debtors reveal that they have collected one terabyte of data, roughly equals to information in 1428 CD-ROMs. The examiner expects the number of documents will approximate "tens of thousands of pages". The probe will look into communications, books and records, bank statements, vendor information, organisational charts, agreements, jewellery valuations, banking and other financial records, internal policies and protocols, and inventory/sale/consignment documents.
The examiner estimates that the fees and expenses in connection with his investigation report will be between $1.3 million and $1.5 million, the court document said.
Upon the examiner's request, several of the parties have agreed to voluntarily produce relevant documents and communications and have agreed to participate in informal interviews. Also, identification is on for location of the documents, crafting a document review protocol, creating search terms, and negotiating the creation of secure databases. Also, a proposed protective order has been prepared to apply to documents produced by the parties and these will be housed in a document depository.
The examiner will also try to find out if any current officer or director of the US company 'actively and knowingly participated' in the fraud or dishonesty in the company affairs' management.
Although the parties have thus far agreed to cooperate with the investigation, Carney is also preparing a motion for authority under Rule 2004 of the Federal Rules of Bankruptcy Procedure "to issue subpoenas and conduct formal discovery" without further application or order of the court.
Carney plans to interview key witnesses in the United States, and if necessary in India, who are or were employed in functions relevant to the investigation, i.e. sales, finance and accounting, operations, and contracting.
Also, on cards is a forensic financial analysis of the books and records of Firestar's debtors, bank records, vendor records etc., consistent with the investigation, and trace the movement of monies obtained under the alleged fraud circumstances against PNB to the debtors, and related entities and individuals.
"While the examiner plans to obtain from the parties any financial analyses performed in connection with this matter, he will require the assistance of a financial advisor with forensic experience to test those analyses, as well as to perform transaction testing, trace the flow of money, and analyse protocols and internal controls," said the document filed with the court.
Carney wants to engage with the Indian Ministry of Corporate Affairs and other agencies within the Government of India, if needed, for information and documents relevant to this probe. The examiner is planning to complete the investigation and report within 120 days.
DIAMOND TROUBLE
- Collected data roughly equals to information in 1,428 CD-ROMs
- Probe may reveal to what extent the Modi entities have the ability to influence Firestar
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
 "Nirav Modi")
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}