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Winsome Diamonds

The document discusses a diamond company called Winsome Diamonds that defrauded Indian banks of over Rs 6,800 crore. It was incorporated in 2002 and grew rapidly before defaulting on loans in 2012. The owner, Jatin Mehta, fled to another country and authorities were unable to recover the stolen funds or prosecute due to lack of an extradition treaty.

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69 views

Winsome Diamonds

The document discusses a diamond company called Winsome Diamonds that defrauded Indian banks of over Rs 6,800 crore. It was incorporated in 2002 and grew rapidly before defaulting on loans in 2012. The owner, Jatin Mehta, fled to another country and authorities were unable to recover the stolen funds or prosecute due to lack of an extradition treaty.

Uploaded by

parthmehta7890
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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WINSOME

DIAMONDS
SCAM
Purva Chauhan
BCH21317
B.COM Hons “C”
About the
Company
The company was incorporated on 10th
september and was called Su-Raj
Diamonds (India) Limited as a public
limited company.

It was promoted by MR. JATIN MEHTA


and others. Setup to manufacture
diamonds.
The Golden Period
2002: Board approved incorporation of 100% subsidiary in UAE.
April 2003: Winsome Diamonds acquired Koradiam NV in Antwerp,
Belgium.
March 2005: Purchased 49% stake in Forever Precious Jewellery for
domestic market expansion.
2001: Name changed from Su-Raj Diamonds (India) Limited to Su-Raj
Diamonds and Jewellery Limited.
2012: Name changed to Winsome Diamonds and Jewellery Limited.
Last reported revenues: 18-month period ending September 30, 2013,
showing Rs 7,131 crore.
What went wrong?
Winsome Diamonds and Forever Precious Jewellery imported gold and diamonds,
processed them into jewellery, and exported the products.
Exported to 13 companies in the UAE.
Indian banks (Punjab National Bank, Canara Bank, Central Bank of India, Union Bank
of India, and Vijaya Bank) provided SBLCs worth over Rs 4,000 crore to the Winsome
group.
November 2012: Winsome informed banks that 13 UAE-based companies couldn't
make payments due to losses in derivative trading, leading to SBLCs invocation by
bullion banks, causing losses to Indian banks.
March 2013: Winsome claimed inability to pay banks due to delays in receiving
remittances from overseas customers.
What went wrong?
Total due from 13 UAE companies: approximately $875 million (about Rs
4,760 crore)
Winsome Diamonds group owed over Rs 6,800 crore to a consortium of
banks.
Rs 4,680 crore owed by Winsome Diamonds and Rs 2,122 crore owed by
t

Forever Precious Diamonds.


12 out of 14 banks declared Winsome Diamonds as a wilful defaulter,
except Standard Chartered Bank and Axis Bank.
Vijaya Bank and State Bank of Mauritius reported Winsome Diamonds'
default on loans of Rs 77 crore and Rs 28 crore, respectively, but didn't
classify them as "willful" default.
Winsome
Group’s
Dues to
Banks
Corporate Scandal
(Whistle Blowing)
Jatin Mehta, owner of Winsome Diamonds and its subsidiary Forever
Precious Jewellery, caused a loss of over Rs 6,800 crore to various banks in
2013.
Banks declared Mehta a wilful defaulter, but he had already fled India and
acquired citizenship of St Kitts & Nevis in 2014.
Central Bureau of Investigation (CBI), Enforcement Directorate (ED), and
other Indian government agencies filed FIRs, made arrests, and attached
Mehta's properties.
However, these actions didn't aid banks in recovering their dues.
Corporate Governance Failures

Illegal Transactions Unethical Practices

Fraudulent Auditing

Financial Misrepresentation Non Transparent Entity


Legal Actions
Jatin Mehta's move to become a citizen of St Kitts was seen by Indian law enforcement as
evidence of deceitful intentions towards banks.
India lacks an extradition treaty with St. Kitts, rendering Mehta beyond the reach of Indian
authorities.
CBI initiated investigation in 2014 after Punjab National Bank (PNB) filed the first FIR
against Winsome Diamonds.
A CBI FIR from May 15, 2019, based on Union Bank of India's complaint, cited revelations
from a Kroll Advisory Solutions audit report.
The audit revealed discrepancies: Winsome Diamonds' stock value inflated from Rs 45.16
crore (as per audited 2011-12 balance sheet) to Rs 153.46 crore (as per March 31, 2013
stock statement).
Kroll report suggested that Winsome Diamonds' dues from UAE-based companies lacked
export substantiation, indicating potential fraudulent "paper" transactions
Legal Actions
Fake invoices allegedly used to secure loans diverted to other businesses like real
estate, including Saumya Constructions Pvt. Ltd. and Shrishti Infrastructure Development
Corporation Ltd.
Former Winsome Diamonds employee claimed jewellery distributed only after receiving
payments from distributors.
Funds from banks allegedly invested in real estate and other businesses through an
entity called Gemesis in Singapore, without agreements to ensure payments.
Allegations hinted at fraud and smuggling due to lack of agreements between banks and
foreign companies.
April 2018: CBI arrested Hasmukh Shah, former director of Forever Precious Jewellery,
reportedly closely associated with Jatin Mehta.
May 2016: Enforcement Directorate (ED) attached 16 assets of Winsome Diamonds
worth over Rs 172 crore under the Prevention of Money Laundering Act (PMLA).

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