PNB fraud: SEZ trade books inflated in Mehul Choksi LoU affair

Hyderabad Gems SEZ owned by Punjab National Bank (PNB) fraud accused Mehul Choksi of Gitanjali Group had shown a book value of exports amounting to Rs 11,083 crore in 2016-17 and Rs 9,000 crore in 2017-18 (till January) from SEZ units. The volume of imports and exports, suspected to be inflated in the SEZ has come under scanner of investigation agencies.

CBI, which had registered a FIR against Choksi and three companies — Gili India, Gitanjali Gems and Nakhastra Brands with manufacturing units in Hyderabad Gems SEZ — is probing allegations of inflation of import-export book value to raise funds through fraudulent Letter of Understanding (LoU) in the name of footing import bills. Agencies are also probing Net Positive Foreign Exchange Earnings (NFEE) of the SEZ.

Speaking to TOI, SEZ development commissioner Sobhana K S Rao said, “Hyderabad SEZ units are importing silver more than gold and diamonds. Silver ornaments are manufactured and exported to other countries. We provided customs duty exemptions. I visited the SEZ two years ago. Customs officials are present in the SEZ and monitor what is coming and going. This year, exports are on decline.”


Sources in CBI said authenticity of imports and exports is being probed. “Import and export values shown in books were high in 2016-17 when compared to earlier years. Banking fraud cell investigators are verifying the import-export value of Hyderabad Gems SEZ may have been inflated to dupe banks,” said a CBI officer. Deputy development commissioner of SEZs in Hyderabad, Srinivas told TOI, “Hyderabad Gems SEZ is showing positive NFEE for five years.”

On Monday, Enforcement Directorate personnel visited Hyderabad SEZ at Ravirayala again along with approved valuers to find whether seized stock is worth ?3,800 crore as shown in computer inventory. It is suspected the book value is inflated. According to Ministry of Commerce Report, physical exports of ?2,134 crore were effected in four years (2008-09 to 2011-12) from Hyderabad Gems SEZ. Customs officials on deputation with ministry of commerce are posted permanently in the SEZ.

An official of PNB said, “PNB staff is assisting ED in evaluation of stock seized in Hyderabad Gems SEZ lockers. It will take a week for completing evaluation.” The fate of 550 employees still hangs in balance as the units are sealed.

CBI, which registered a FIR against Choksi and three companies, is probing allegations of inflation of import-export book value to raise funds through fraudulent Letter of Understanding (LoU) in the name of footing import bills.