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Monday, April 14, 2025

Mehul Choksi Arrested in Belgium: Key Accused in Rs 14,000 Crore PNB Fraud Case

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Fugitive Businessman Mehul Choksi Arrested in Belgium in PNB Bank Loan Fraud Case

In a significant development in the long-running Punjab National Bank (PNB) fraud case, fugitive diamond merchant Mehul Choksi has been arrested by Belgian authorities following an extradition request from India. The arrest, which occurred on Saturday, marks a crucial breakthrough in one of India's most high-profile financial fraud investigations.

Arrest Details and Background

Choksi, a key accused in the Rs 14,000-crore PNB fraud case, was apprehended based on two non-bailable warrants issued by a Mumbai court, dated May 23, 2018, and June 15, 2021. The 65-year-old fugitive diamond trader has been evading Indian authorities since January 2018, when he fled the country just before the massive banking fraud came to light.

According to investigative agencies, Choksi, his company Gitanjali Gems, and other associates allegedly colluded with bank officials to fraudulently obtain Letters of Undertaking (LoUs) and enhance Foreign Letters of Credit (FLCs) without following proper procedures. These actions reportedly caused substantial financial losses to Punjab National Bank, one of India's largest public sector banks.

Expected Legal Challenges

Following his arrest, Choksi's legal team is reportedly preparing to mount a defense against extradition efforts. His lawyers are expected to seek bail and challenge India's extradition request on various grounds, with his medical condition being cited as a primary factor. The 65-year-old businessman had reportedly traveled to Belgium to receive cancer treatment.

Extradition proceedings could be complex and protracted, according to experts familiar with international legal procedures. The PNB scam whistleblower Hariprasad SV commented on the development: "It's really great news. We are very glad for all those people who were cheated by Mehul Choksi in India. It's unbelievable how he got caught in Belgium."

However, Hariprasad also cautioned about the challenges ahead: "Extradition is not going to be an easy task. His wallet is full, and he will employ the best advocates in Europe, as Vijay Mallya has been doing. It is not easy for India to get him back... Even though he was caught in Antigua, he managed to get out of it as he had a fleet of lawyers."

Choksi's Journey as a Fugitive

Choksi's flight from justice has been marked by several notable developments:

  • January 2, 2018: Choksi left India, initially traveling to the United States
  • 2017: Prior to fleeing, he had acquired Antiguan citizenship
  • 2021: Choksi was arrested in Dominica under controversial circumstances
  • His legal team claimed he was kidnapped from Antigua, while authorities alleged he was attempting to flee to Cuba
  • Despite India's extradition efforts, Dominica deported him back to Antigua
  • Recently: Choksi traveled to Belgium, reportedly for cancer treatment, where he has now been detained

The PNB Fraud Case

The case against Choksi relates to one of India's largest banking frauds. Along with his nephew Nirav Modi (who is currently in a UK prison fighting his own extradition case), Choksi is accused of defrauding Punjab National Bank of nearly Rs 14,000 crore.

The alleged fraud involved the issuance of fraudulent Letters of Undertaking (LoUs) - essentially bank guarantees that were used to secure loans from overseas branches of Indian banks. These financial instruments were allegedly issued without proper authorization or documentation, bypassing the bank's core banking system.

The fraud remained undetected for years as the accused reportedly colluded with certain bank employees. When the scheme finally came to light in early 2018, both Choksi and Modi had already fled the country, triggering a global manhunt that has now resulted in Choksi's arrest in Belgium.

Implications and Next Steps

The arrest represents a significant step in India's efforts to bring the accused to justice in the PNB fraud case. If successfully extradited, Choksi would face multiple charges under Indian law, including fraud, criminal conspiracy, and money laundering.

However, as noted by observers, securing his actual return to India could still prove challenging due to the complex nature of international extradition proceedings and the substantial legal resources at his disposal. The process could potentially involve multiple legal challenges and appeals before reaching a conclusion.

Financial market analysts will be closely watching how this development affects ongoing efforts to recover the defrauded funds and strengthen banking oversight mechanisms to prevent similar frauds in the future.

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