Indian Fugitive Held in Belgium Over $1.8 Billion Bank Scam

Mehul Choksi, a fugitive Indian jeweler wanted in connection with a massive $1.8 billion fraud against Punjab National Bank (PNB), has been apprehended in Belgium, marking a significant development in the long-running case that has shaken India's financial sector. The arrest, made at the request of Indian authorities, opens a new chapter in the efforts to bring Choksi to justice, though a potentially lengthy extradition battle looms.

The Arrest and Extradition Request

Choksi was detained on April 12, 2025, while reportedly undergoing medical treatment at a hospital in Belgium. The arrest was executed by Belgian authorities based on non-bailable warrants issued by courts in Mumbai and at the behest of Indian agencies, including the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED). The Indian government had already sent an extradition request prior to his arrest.

Sources indicate that Choksi had been residing in Antwerp with his wife, Preeti Choksi, after obtaining a residency card. He had reportedly traveled to Europe citing poor health, shortly after Indian authorities intensified efforts to bring him back to India.

The Punjab National Bank Scam

The PNB scam, which came to light in 2018, involved the fraudulent issuance of Letters of Undertaking (LoUs) and the manipulation of Foreign Letters of Credit (FLCs) to the tune of approximately $1.8 billion (₹13,500 crore). These financial instruments were used to obtain credit from overseas branches of Indian banks under the guise of trade finance.

The alleged fraud was orchestrated by Choksi, the managing director of Gitanjali Gems, and Nirav Modi, another prominent jeweler. Investigations revealed that the duo, in collusion with rogue bank officials, bypassed PNB's core banking system to secure these fraudulent LoUs.

Modus Operandi

According to investigators, Nirav Modi began securing LoUs from PNB's Brady House branch in Mumbai as early as March 2011. Over the next six years, he managed to obtain 1,212 such guarantees, far exceeding the 53 genuine LoUs issued to his companies during the same period.

The fraud went undetected for years due to the complicity of bank insiders, including a deputy general manager who allegedly bypassed core banking systems to issue these guarantees. They fraudulently acquired guarantees worth $1.77 billion to obtain loans from the overseas branches of Indian banks, claiming to need the cash to import pearls. The funds, instead of being used for importing goods like pearls as claimed, were allegedly diverted and laundered.

Implications and Fallout

The PNB scam has had far-reaching implications for India's banking sector and regulatory landscape. The discovery of the fraud led to increased scrutiny of corporate governance practices and banking regulations in India. The Reserve Bank of India (RBI) has since stopped issuing Letters of Undertaking (LoU) and Letters of Comfort (LoC) for imports, which has limited the financial flexibility of importers.

The scam also significantly tarnished the reputation of Punjab National Bank, India's second-largest state-owned bank. The bank has taken legal action against several accused, including Modi and Choksi.

Legal Battles and Extradition Efforts

Following the exposure of the scam, both Nirav Modi and Mehul Choksi fled India in early 2018, days before the news became public. Indian authorities have been pursuing their extradition ever since.

Nirav Modi was arrested in London in March 2019 and has been fighting extradition to India. His appeals have been rejected by UK courts, and the UK Home Secretary has signed the extradition order. Modi remains imprisoned in Wandsworth Prison in south-west London.

Mehul Choksi, after initially taking refuge in Antigua and Barbuda, has now been detained in Belgium. He is expected to contest the extradition request on medical grounds, potentially leading to a protracted legal battle. Sources confirm that Choksi is likely to pursue all available legal remedies in Belgium to resist deportation.

Awaiting Justice

The arrest of Mehul Choksi in Belgium represents a significant step forward in the efforts to bring the perpetrators of the PNB scam to justice. While the extradition process may be lengthy and complex, it underscores the commitment of Indian authorities to pursue those accused of defrauding the country's financial institutions. The outcome of these legal battles will have important implications for India's efforts to combat economic অপরাধী and recover the stolen funds.