A court-appointed liquidator in India will start auctioning precious metals and gemstones belonging to Firestar Diamond International Pvt., once owned by former tycoon Nirav Modi, to clear total claims of lenders amounting to more than Rs 12,000 crore ($1.5 billion).
The auction will take place on March 25, said Santanu T. Ray from AAA Insolvency, the court-appointed liquidator to handle the bankruptcy proceedings. “This will be the first auction of precious metals and stones” released by the government agency, which probes white-collar crimes.
Punjab National Bank, Canara Bank, IDBI Bank Ltd., and Union Bank of India Ltd. are among lenders that extended credit to the company, which was allegedly mired in one of the largest fraud cases in India.
Modi has become the poster boy for a series of bank frauds over the past decade in the diamond industry in India, which cuts or polishes about 90% of the world’s supply. The Indian government accused Modi of defrauding the country’s second-largest bank, Punjab National Bank, of around $2 billion using credit guarantees for his diamond business. Modi has denied all allegations of wrongdoing and contested his extradition from the UK.
The liquidator has engaged the Gemmological Institute of India, an industry group that provides certification services, to gage the correct value of the gold and diamond items, Ray said.