Why is this billionaire Modi being called a conman?

Nirav Modi's rise to fame and fortune was meteoric. The Indian billionaire left his mark almost everywhere. On Hollywood red carpets, his diamonds have sparkled on the necklines and dangled from the earlobes of actors and models like Kate Winslet, Dakota Johnson and Rosie Huntington-Whiteley.

Back in India, billboards above the traffic jams of New Delhi bear the image of Priyanka Chopra, a Bollywood star and former Miss World who is fast becoming a household name in the United States, also adorned with Modi's jewels.

But on Thursday, officials at the nation's federal investigative agency announced it was looking for Modi as law enforcement officials fanned out to raid his jewellery stores and other businesses in Mumbai and New Delhi.
Central Bureau of Investigation (CBI) officials told reporters the agency had on February 4 issued a lookout circular in the country for Modi, who they say had left four weeks earlier.

Nirav Modi, who has a net worth of some $1.8 billion according to Forbes magazine rankings, has not yet responded to the allegations.

His flagship company, Firestar Diamond, has said it had no involvement in the case.

The setback in Nirav Modi's climb to fame and fortune was abrupt, even by the rough-and-tumble standards of one of the world's fastest growing major economies.Recently, when asked how he planned to raise funds to add new stores, he seemed unconcerned.

"All options are open," he said, sitting in his cavernous Mumbai office. "We could use internal accruals. We can take loans from banks or we could do an initial public offering." But last month, India's second-largest state-run lender filed a criminal complaint with the CBI that accused Modi and others of defrauding the bank and causing it a loss of 2.8 billion rupees ($43.8 million).

Then on Thursday, the same bank, Punjab National Bank , publicly alleged that Modi was involved with a much larger fraud case: $1.77 billion from a single branch stretching back to 2011.

The news was a shock for the circles in which Nirav Modi moved.

As recently as last month, he was at the World Economic Forum in Davos. Indian media carried a group photograph with Prime Minister Narendra Modi in the foreground and Nirav Modi, who is no relation, grinning between rows of Indian business leaders behind him.

"Top industrialists invited him home to display his collections," said a Mumbai investment banker at a US-based firm who has worked directly with Modi's company. "There was a personal touch in everything he sold. Nirav Modi is a brand." A senior member at Bharat Diamond Bourse, a Mumbai-based industry body with more than 13,000 members, sketched a similar profile of Modi.

"In one of the industry meetings in 2013 he said that when people wear a Cartier ring they don't say it's a diamond ring, they say it's Cartier," said the member, who did not want to be named. "He always wanted people to say they are 'wearing Nirav Modi'."

The beginning

Modi grew up in Antwerp, Belgium, in a diamond-dealing family. In 1990, at the age of 19, he moved to Mumbai.
Nine years later, Modi started his own company, Firestar Diamond Ltd., selling loose stones. He employed fewer than a dozen people at the time. By last year, the number was more than 2,000.

Born in India and raised in Antwerp, the diamond capital of the world, Modi is a third-generation diamantaire.

Modi grew up in the thick of the diamond business, but described as a soft-spoken and unassuming man by those who know him, aspired to be a music conductor.

But it was not music that he finally pursued, he joined the family business of his maternal uncle at Gitanjali Gems Ltd in Bombay (Mumbai) at 19 after dropping out the of University of Pennsylvania’s Wharton School. Uncle Mehul Choksi, chairman, Gitanjali Gems, is one of the four accused in the ongoing CBI investigation, although he has denied being associated with any of Modi’s companies.

It was his initial nine years at Gitanjali Gems in the 1990s that laid the foundation for Modi’s own jewellery business.

Modi’s tryst with jewellery design happened by chance, in 2009, when he was persuaded to design a pair of earrings for a friend.

Within a year he went on to become the first Indian to feature on the cover of a Christie’s auction catalogue in 2010 for a Golconda diamond necklace that fetched $3.56 million at its auction in Hong Kong. In October 2012, his Riviere Diamond Necklace was sold for $5.1 million at a Sotheby’s auction in Hong Kong. In 2013, Modi entered the Forbes list of billionaires.

Today, the brand manages to hold its own among rivals like the century-old Van Cleef and Arpels and Richemont SA’s Cartier, and his clients include Hollywood star Kate Winslet who wore diamond creations by the jewellery designer for her red-carpet walk at the 2016 Oscars. In addition, many of India’s biggest business families have been buying diamonds from him for years.

Modi is ranked 1,234 in Forbes’s world’s billionaires list for 2017, and 85 in India. His financial worth is estimated at $1.73 billion through his jewellery design and retail businesses, according to the Forbes website.

At the peak

Firestar Group, the parent company Modi controls as a majority shareholder, saw its revenue grow over three years from 103 billion rupees (about $1.6 billion at current rates) to some 147 billion rupees ($2.3 billion) by the 2016-17 fiscal year, according to figures previously provided by the company.

In 2010, Modi launched an eponymous jewellery business branded NIRAV MODI, in capitals, with the tagline "Haut Diamantaire". New boutiques in Las Vegas and Hawaii have since been added to a stable that stretches from New York to London to Beijing.

He became a man whose diamond necklaces were sold, with his name attached, by Sotheby's. "Pure feminine elegance," says a Hong Kong auction catalogue note of one 85.33 carat diamond necklace.

The auction house posted an online slideshow of jewellery-on-stars at the 2017 Oscars and highlighted supermodel Karlie Kloss having "a major Nirav Modi moment with her diamond 'Mughal' choker." But the celebrity links could be starting to break.

A spokesperson for Chopra, the film star, said in a statement: "She is currently seeking legal opinion with respect to terminating her contract with the brand in light of allegations of financial fraud against Nirav Modi."

The fall

Punjab National Bank, India's second-largest state-run lender, sought to soothe investors on Thursday after the discovery of a $1.77 billion scam at a single branch sent its shares plunging and raised fears about the scale of fraud in the sector.

Investigators launched raids across Mumbai and New Delhi, targeting offices and homes linked to Nirav Modi. The steep fall has wiped off $1.27 billion from PNB's market capitalisation in the past two days.

The billionaire jeweller left India on January 1, before a police case was registered against him later that month, a federal police source said. His current whereabouts are unknown.

Law minister Ravi Shankar Prasad said the authorities had seized assets worth 13 billion rupees ($203 million) from Modi and initiated action to revoke his passport.

PNB's Mehta said Nirav Modi had written to the bank about a possible repayment, but had not yet come up with any concrete plan.