Diamond trade body helps DRI unearth scam
New Delhi: Officials of Gems and Jewellery Export Promotion Council (GJEPC), a Commerce Ministry body, worked as whistle blowers to help the Department of Revenue Intelligence (DRI) expose a multi-crore diamond scam. Business Television India (BTVI) has learnt GJEPC officials uncovered how seasoned diamond valuers were working in tandem with diamond traders to inflate costs of the solitaires.
GJEPC officials, on collating information, alerted the investigating agencies as to how the valuers were corrupting the system. Three top diamond valuers and a Customs agent were arrested this week. Diamond valuers are the most important cog in the diamond trade, they value the solitaires and put price tags.
Thanks to the GJEPC, the DRI has busted a multi-crore import scam where valuers inflated the cost of precious stones brought into India and used this very route to transfer illegal cash out of the country. An estimated Rs 3,000 crore travelled outside India in the last year and half.
"It is unfortunate that a group of people who are not members of GJEPC have used Gem & Jewellery product as a conduit for money laundering and malpractices,” Pramod Agrawal, Chairman, GJEPC said.
In the Indian Capital, Commerce Ministry officials said it was “distressing it happened around the time Nirav and Mehul scams were slowly unfolding”.
DRI officials said diamond merchants with the connivance of valuers were inflating the value of precious stones brought into India and using the route to transfer illegitimate cash outside the country. A little over Rs 3,000 crore has been taken out in the last year and half.
“There are high chances that the scam could touch almost Rs 10,000 crore,” DRI officials said. As many as four importers were identified by the DRI but all of them escaped before they could be arrested. They, claimed DRI officials, had inflated the value of the imports from Rs 1 crore to Rs 160 crore.
And then, they took the inflated value out officially as payment to be made to the sellers. The valuers arrested were Pradeep Kumar Jhaveri, Naresh Mehta and Paresh Shah. The Customs clearing agent was identified as Vishal Kakkad.
The valuers connived with several other importers and issued certificates inflating the value of the imports. The valuers, who are enrolled on the customs panel, are selected after verifying their credentials. GJEPC officials said those arrested were not certified by the trade body.
In the 2014 case of Nirav Modi, investigations revealed he was exporting very low quality diamonds, overvaluing them to bring black money into the country. Import of rough diamonds attracts a 0.25 percent duty. The diamond packets are Customs cleared before possession by the merchants. Based on the parameters listed as part of the risk analysis system, some consignments are checked by the Customs.
The scam was unearthed when DRI officials were informed that 14 consignments of rough diamonds from Dubai and Hong Kong were headed for the Bharat Diamond Bourse. The value was estimated at Rs 156 crore but once DRI officials intercepted the consignments, it was revealed the consignment was only worth Rs 1.2 crore.