More groups importing rough diamonds at high rates: DRI

MUMBAI: India’s diamond industry is seeing a string of scams unravel since the biggest one — the Rupee14,000-crore Nirav Modi-Mehul Choksi fraud — broke out in February this year.

The Directorate of Revenue Intelligence (DRI), investigating a money laundering racket emerging out of the Bharat Diamond Bourse (BDB), has found a couple of more groups involving seveneight entities to be allegedly importing rough diamonds at hugely inflated rates as a conduit to remit black money out of Indian shores, persons aware of the investigations told ET.

The imports are mainly from Hong Kong and Dubai. “Out of the (rough diamond) consignments held up by customs at the instance of DRI, the latter found a few more groups were importing stones at declared value of Rupee100 crore against true value of just Rupee3-4 crore,” said one of the persons. “DRI has arrested a person from one of the groups though he is believed to be a mere front. Others from the group are absconding.”

“The DRI has widened its probe and is trying to ascertain the actual beneficiaries behind the alleged money laundering through bank statements and transactions of the absconding parties. It suspects heavy fund layering and is tracing back the origins of the illgotten money. It also suspects the proportions of the money laundering carried out over the years to be more than Rupee2,000 crore. “Investigations will continue in the coming weeks,” one of the sources confirmed. DRI’s additional director general was not immediately available for comment.

The apex anti-smuggling agency had on July 10-11 intercepted 14 consignments from BDB following its own investigation and a tipoff. The consignments, imported by certain Mumbai and Suratbased traders from Hong Kong, were allegedly overvalued by 100-150 times in connivance with certain customs appointed valuers.

Their actual worth was Rupee1 crore against a pegged value of Rupee156.28 crore. Three valuers are currently in custody, their bail applications having been rejected by a sessions court recently. After the seizure of 14 consignments, DRI has begun investigations into other suspected imported consignments. The latest findings of alleged money laundering stem from these held up consignments, said sources.

The heads of the imported firms are believed to have received up to 4per cent commission for facilitating the alleged hawala. The cutting and polishing of diamonds happens in Surat, while imports of roughs and export of polished stones take place mainly out of BDB.

The bourse’s president Anoop Mehta and officials from the Gem and Jewellery Export Promotion Council (GJEPC) jointly told ET earlier that a large number of genuine traders were suffering for the acts of a few fly-by-night importers and that they would extend all cooperation to DRI “to weed out the corrupt”.

Provisional imports of rough diamonds were $18.8 billion in FY18, while exports of cut and polished diamonds during the relevant period were a provisional $23.73 billion, according to GJEPC.