Employees of Firms Owned by Nirav Modi and Mehul Choksi at Receiving End of PNB Scam

Thousands of employees of the firms owned by diamond businessmen Nirav Modi and Mehul Choksi are at the receiving end of the Rs. 12,600 crore Punjab National Bank scam.

The employees of the Firestar Diamond International Pvt Ltd and Firestar International Ltd owned by Nirav Modi, and the Gitanjali Group owned by Modi’s maternal uncle Mehul Choksi are facing an uncertain future as the units of the firms have been either locked out or sealed by investigative agencies.

Nirav Modi’s firms located in the Special Economic Zone (SEZ) at Surat, Gujarat have not been able to pay salaries to their employees for January, as their bank accounts were frozen by the Enforcement Directorate (ED) and the Central Bureau of Investigation (CBI), said a PTI report.

About 700 employees of the two firms in the SEZ have lost of their jobs as the management locked the units and asked the employees to look for jobs elsewhere, the report said. The management has told the workers that it cannot pay the outstanding salaries for January and February as all the bank accounts have been frozen by the ED and the CBI.

Another 700 employees of the Gitanjali Gems Park owned by Mehul Choksi in Hyderabad have been protesting to save their jobs after five jewellery units in the park, which is also an SEZ, were sealed by the ED.

About 300 among the employees are disabled, with 100 among the 300 being women. Many of them had a salary of Rs. 750 per month when they started working at the SEZ and on the eve of the firms being sealed, they were drawing salaries of Rs. 12,000 to Rs. 15,000. The employees were trained to work at jewellery units, and have no other source of livelihood.

The Gitanjali Gems Park – known as Rajiv Gems Park till 2014 – was set up in 2005 on land allocated when YS Rajasekhara Reddy was the Chief Minister of Andhra Pradesh.

Sources at the Centre of Indian Trade Unions (CITU) told Newsclick that 171 acres had been allotted to the park for a paltry sum of Rs. 4 crore in 2005.

The workers have been demanding that the Telangana government should take over the firms so that work can continue and their jobs protected.

“The central and state governments have been violating workers’ rights in the name of SEZs,” said M Saibabu, the Telangana State Secretary of the CITU. “We have conducted a roundtable meeting with the gem industry workers, trade unions and other organisations on 23 February in order to discuss the issue.”

Nirav Modi and Gitanjali Gems stores in various cities in India have shut down, throwing life out of gear for their employees.

Mehul Choksi sent a letter to the 3500 employees of his firms on Friday, 23 February, in which he asked them to look for jobs elsewhere as he may not be able to pay their salaries.

“It is very tough for me, as of now, to be clearing your dues or to pay the future salaries, in view of the seizing of the various bank accounts and other properties by the Government Agencies/ investigating Agencies,” he said. “Further, the HR is being instructed to issue relieving letters and experience certificates, should you desire to have it.”

Nirav Modi also reportedly wrote a letter to the 2200 employees of his firms, in which he said: “As of now, because of seizure and removal of all stocks in factories and showrooms, and freezing of bank accounts, we shall not be in a position to pay your dues, and it would be right on your part to look for other career opportunities.”

Both Modi and Choksi said that they are “committed” to pay the past dues of the employees.

Tapan Sen, General Secretary of the CITU told Newsclick that the companies have a legal obligation to give workers due compensation. “Nirav Modi has got his money already, and he has taken most of it abroad. Only a small portion of it has come into the hands of the government. The government has to get hold of him to bring him under the legal scanner,” he said.

Earlier on Monday night, the PNB reported an additional Rs. 1,300 crore of unauthorised transactions, taking the total estimated quantum of the fraud to Rs. 12,600 crore.

Meanwhile, Nirav Modi’s Firestar Diamond filed for bankruptcy in the US on Monday.

“Under the Insolvency and Bankruptcy Code in India, the workers’ due also should be paid along with the dues of the secured creditors. But for that, the matter has to be referred to India’s National Company Law Tribunal, where the insolvency and bankruptcy process will start,” said Tapan Sen.