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Indian diamond mogul Nirav Modi loses sparkle

Jeweler's aggressive expansion plan hit hard by alleged $1.8bn fraud

Chinese actress Zhang Ziyi, left, and diamond jewelry designer Nirav Modi at the opening of one of his stores in Hong Kong in 2016.   © AP

MUMBAI -- Huge hoardings on Mumbai's Peddar Road, which winds through one of the most high-class residential districts of the city, show larger-than-life images of former Victoria's Secret model Rosie Alice Huntington-Whiteley and actress Priyanka Chopra posing for luxury jewelry brand Nirav Modi.

Famous actresses including Kate Winslet and Viola Davis have shown off the Indian brand's dazzling earrings and necklaces. If everything had gone according to plan, there would have been 100 Nirav Modi stores selling rare, limited edition diamond jewelry at high street locations worldwide by 2025, with brand owner Firestar Diamond entering the primary market to raise funds through an initial public offering.

But all that is on hold for the moment, as Indian law enforcement agencies are trying to hunt down owner Nirav Modi, who gives his name to the brand, over allegations that he fraudulently acquired letters of undertaking worth $1.8 billion from India's second largest public sector lender Punjab National Bank. Media reports suggest that his family, including wife Ami and brother Nishal, as well as business partner and uncle Mehul Choksi of Gitanjali Gems, are also on the run.  

He was last seen in public at the World Economic Forum in Davos in January, where he was photographed smiling alongside high-profile Indian businessmen and Prime Minister Narendra Modi. On Friday, the Foreign Ministry in New Delhi said it had no idea of whereabouts of Nirav Modi at this stage.

The soft-spoken third generation diamantaire, who grew up in Antwerp in Belgium, opened his first store in 2010 at New Delhi's wealthy Defence Colony market, followed by one in Mumbai's creative Kala Ghoda district. He now has around 17 stores across the world, in locations such as Bond Street in London, MGM Macau and the Marina Bay Sands in Singapore. Before all this he was sourcing and making rough diamonds for Firestar Diamond since the 1990s.

A woman walks past a Nirav Modi jewelry boutique displaying a photograph of Bollywood actress Priyanka Chopra in Mumbai on Feb. 15.   © AP

He came to Mumbai at the age of 19 to train under his uncle Choksi. According to the brand's website, Modi drew inspiration from his mother, an interior designer and later an art collector, and decided to build up a brand after designing a necklace for a friend. 

In an interview with the BBC in 2016, Modi, who briefly attended the Wharton School of Business in the U.S., confirmed that his company would open 100 shops by 2025, at an average rate of 10 per year. When the interviewer noted how ambitious the plan was, Modi replied with a smile: "I always will have sleepless nights, but we will have to move forward." 

His expertise lies in crafting jewelry from rare, exquisite diamonds such as the pink diamond, annual production of which "will only fill a champagne flute". "We only make 100 pieces a year so there will never be a replica," he told Indian news channel NDTV Profit.

It is no wonder then that his clientele, which includes the world's elite, spend an average of 500,000 rupees ($7,790) when they buy his rings, earrings and necklaces.

"I bought a ring at the Delhi store in October 2017. It was worth 800,000 rupees. This was the first piece of jewelry I picked up from this brand," said a 32-year-old housewife from New Delhi. "The designs are very modern and unconventional. I liked that it was different from traditional typical diamond jewelry. I haven't met him. I have heard he only meets celebrities or very high spenders."

His glamorous image, however, has had its dark spots. Local newspaper, The Hindu, has reported that in December 2014 the Directorate of Revenue Intelligence probed Firestar Diamond International for exporting "diamond-studded jewelry by overvaluing the same and the diamonds studded in the jewelry were of low value". The case was later closed after the company paid penalties and duty.

The actress Priyanka Chopra is featured in a Nirav Modi advertisement for jewelry in Mumbai on Feb. 15.   © Reuters

In January, India's Income Tax Department carried out surveys in 50 of Nirav Modi's offices and homes on allegations of tax evasion. 

The final blow-up was Punjab National Bank's announcement this week of alleged fraud related to letters of undertaking, which extends to at least half a dozen banks from which Modi's companies have taken loans against the LoUs. On the advice of the Enforcement Directorate, which is probing the case along with the Central Bureau of Investigation, the Ministry of External Affairs suspended the validity of the passports of Modi and Choksi for four weeks. The Ministry will revoke their passports if they fail to explain why their passports should not be impounded. 

Actress Priyanka Chopra is now seeking legal advice to terminate her contract with the brand due to the latest allegations, taking some shine out of the diamond man's star-studded galaxy.

Kiran Sharma, Nupur Shaw, Nikkei staff writers in New Delhi, contributed to this story


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