Behind Kingfisher Airlines and Punjab National Bank defaulter Nirav Modi, Jatin Mehta’s Winsome Diamond company is India’s third-largest defaulting company. Investigation agencies were able to find assets worth over 6,000 crores in the Nirav Modi case, but there were no clues in the Winsome Diamond case.
The Winsome Diamond family left no trace behind. Mehta and his wife reportedly fled the nation in 2013 and obtained citizenship in St Kitts & Nevis the same year. The CBI has charged Jatin Mehta in more than a dozen cases.
Jatin Mehta Early Life
Jatin Mehta developed an early passion for all things related to diamonds because his family has been in the diamond industry since the 1960s.
Mehta received a Bachelor of Commerce degree from Mumbai’s Hassaram Rijhumal College of Business and Economics after completing high school at Mumbai’s Hill Grange High School. Mehta was drawn to the diamond industry because of his natural aptitude for business.
Jatin Mehta Career
Jatin Mehta, the founder of India’s first public diamond trading company, Su-Raj Diamonds Limited, began his diamond career in 1985. After over fourteen years with this organization, he earned a reputation as an industry leader.
He managed his firm in a straightforward manner and paid back all of his debts on time. Mehta received various accolades and certificates of achievement while running Su-Raj Diamonds, including Diamantaire of the Year and certificates of merit, as well as recognition as the country’s top exporter of cut and polished diamonds.
Mehta expanded his business after his success at Su-Raj Diamonds, forming Winsome Diamonds and Jewellery Limited and Forever Diamonds.
Jatin Mehta Biography
|Real Name||Jatin Mehta|
|Nick Name||Diamond Tycoon|
Jatin Mehta – Working of diamond industry in earlier times
Mehta’s company Winsome Diamonds began exporting diamonds to the UAE in the early 2000s. Jatin Mehta owns a company that imports uncut diamonds from other countries. The diamonds would then be cut, polished, and put into jewelry pieces, which would subsequently be exported to UAE clients.
Several foreign bullion banks, including Bank of Nova Scotia, Standard Bank PLC London, and Standard Chartered, provided Mehta with gold for his jewelry business on credit. Bullion banks are financial institutions that deal with precious metals. Their activities include trading, clearing, physical metal delivery, and sourcing lenders and borrowers.
International bullion banks provided Mehta with the gold he required for his jewelry company.
Yet, for foreign banking transactions, there are many procedures in place to ensure that neither side is cheated and that the contract is honored. If Jatin Mehta refuses to repay the money he borrowed from the bullion banks, they will be at a disadvantage. This is due to the fact that they will be unable to locate a man in a foreign country.
Obtaining a letter of credit from an Indian bank
To avoid such situations, a bullion bank asks a company requesting gold finance to provide a backup letter of credit from a domestic bank. In the sense that the domestic bank assumes responsibility for the loan, it is a guarantee. Companies that default are accountable for repaying their debts. Companies that default must pay the entire gold amount alone.
A bank will not just give a standby letter of credit to anyone. Due diligence is also part of the procedure. The corporation requesting for a letter of credit may be asked to keep some collateral with the bank, depending on the magnitude of the transaction.
Jatin Mehta was granted standby letters of credit from the Bank of Maharashtra, Canara Bank, Union Bank, and other Indian banks. A reputation for stability in the diamond industry paid off here for his hard-earned reputation. He had also built up an excellent credit score and a flawless repayment record for Winsome.
Jatin Mehta Scam
For years, the transaction flow in this line was smooth. Jatin Mehta’s firm was run so well that the banks began to trust him and increased his credit line. Until 2012, this setup worked well.
Then, without warning, it stopped working. In November 2012, Mehtas defaulted on payments. He blamed a gang of 13 UAE purchasers for causing him unanticipated losses in derivatives and commodities trading.
He had not been paid for the jewelry supply because of this situation. Without incoming revenue, Mehta said he would be unable to pay for the gold he had received from the bullion banks.
The disastrous state of India Bank
The scenario was disastrous for the Indian banks that had issued a standby letter of credit to Jatin Mehta. If he misses payments, however, these banks will be accountable for paying off all of his debts.
As you might expect, Mehta had defaulted on a significant amount. The Winsome group, which includes Winsome, Forever, and Su-Raj, owed approximately 7,000 crores. Repaying this sum would be difficult and would cause serious damage to India’s bank accounts.
So, reimbursement was out of the question. Despite being penalized for the delinquency, the Indian banks involved opted to conduct their own investigation.
According to Jatin Mehta, there are 13 individual buyers in the UAE. The statement, however, turned out to be incorrect. All 13 firms were controlled by a single person. Furthermore, it was revealed that ten of the thirteen businesses were founded in 2012.
On the same day, June 25, 2012, five of them were incorporated. Once these facts were revealed, they realized they had been duped. There were no buyers in the UAE. As a result, Jatin Mehta designed this complex strategy to swindle the Indian economy of many thousand crores.
Why did they not do anything to stop Jatin Mehta?
To fully appreciate that point, we must recognize that legal processes might take years to complete. As a result, it is not a simple procedure.
In 2013, suspicions about Jatin Mehta and his companies developed. After being defrauded of 7,000 crores, a consortium of banks realized they were dealing with a mastermind and alerted the Central Bureau of Investigation (CBI).
Jatin Mehta was the subject of a three-year investigation by the CBI. The Mumbai police joined the investigation and raided Mehta’s home and office with the help of the CBI. Despite their best efforts, they were unable to build a convincing case against Mehta.
Before any serious charges were brought against Jatin Mehta, his entire family fled India. Saint Kitts and Nevis is their new home, where they have settled down to start their lives.
During this time, Jatin Mehta was declared a wilful defaulter in the case against him by the CBI. Notwithstanding the fact that his company was not bankrupt and he had the funds on hand, Mehta had opted to not repay the money.
The Enforcement Directorate (ED) investigated Jatin Mehta in 2017. Regrettably, the money was taken entirely from government banks.
Mehta had made off with the money that belonged to the taxpayers. The greatest significant loss was incurred by Punjab National Bank, which lost more than Rs. 1,700 crore. Losses of Rs. 699 crores and Rs. 388 crores have been reported by the Central Bank of India and IDBI Bank, respectively.
Mehta’s fate has yet to catch up with him. In the United States, Mehta has a posh lifestyle. He has also established new businesses in the United Kingdom and Montenegro. The diamond firm continues to thrive, and he continues to benefit from his tax-free status.
According to an inquiry, certain bank officials were also complicit in the fraud. CBI and ED are working together to prosecute this willful defaulter.
Similarities between Jatin Mehta and Neerav Modi
Some similarities exist between Nirav Modi and Jatin Mehta. Both hail from the Gujarat town of Palanpur. Both are diamond dealers who have defrauded the Indian economy of lakhs of crores. In both cases, Punjab National Bank is the major victim.