On April 12, fugitive jeweller Mehul Choksi, one of the main accused in the Rs 13,500 crore Punjab National Bank (PNB) fraud, was detained by authorities in Belgium. His arrest came in response to a formal extradition request from the Government of India. Reports suggest that Choksi had been living in Belgium with his wife, Preeti, and had obtained a residency card.
While his detention marks a significant step toward eventual justice and closure in the high-profile scam, it also reignites pressing questions. How did Choksi orchestrate one of India’s biggest banking frauds and flee the country undetected? To trace the origins of the case, one must look back to when the scam first took root—during the Congress-led UPA regime, with Raghuram Rajan serving as the Governor of the Reserve Bank of India.
Congress and RBI’s Silent Spectatorship
The Rs 13,500 crore Punjab National Bank scam, involving Mehul Choksi and his nephew Nirav Modi, began in 2011 when the UPA government was in power. Despite multiple red flags raised by concerned officials, the fraud continued for years without any significant intervention.
During this period, the Congress-led government appeared to turn a blind eye to the growing irregularities. Equally concerning was the inaction of the Reserve Bank of India, then under Governor Raghuram Rajan, which failed to curb the misuse of Letters of Undertaking (LoUs). These financial instruments were repeatedly used to secure massive loans without proper collateral or scrutiny. Shockingly, the same fraudulent LoUs were issued over and over without raising alarms—either at the bank level or within the RBI. This points to institutional negligence and a systemic failure to act when it mattered most.
The 20:80 Gold Scheme: A Parting Gift?
On May 16, 2014, as the Lok Sabha election results confirmed a sweeping victory for the Modi-led Bharatiya Janata Party, the outgoing Congress-led UPA government remained in power in a caretaker capacity until the new Prime Minister was sworn in. During this transitional period, then-Finance Minister P Chidambaram made several last-minute decisions, one of which raised eyebrows for its timing and impact.
In what appeared to be a parting favour, Chidambaram signed off on an order under the controversial 20:80 gold import scheme, directly benefiting 13 companies—among them, Mehul Choksi’s now-notorious Gitanjali Gems. The scheme allowed “star trading houses” to import gold on the condition that 20 per cent would be exported while 80% could be sold domestically. This policy, criticised for encouraging hoarding and market speculation, led to inflated gold prices and created loopholes ripe for exploitation. Despite warnings from industry bodies, both the Congress government and the Reserve Bank of India under Governor Raghuram Rajan chose to look the other way—setting the stage for financial misconduct on a massive scale.
‘Loose Alliance’ with Congress: Lawyer’s Explosive Revelation
In August 2018, Mehul Choksi’s lawyer, David Dorsett, made headlines with a startling claim during an interview with Republic TV. He alleged that Choksi had a “loose alliance” with the Congress Party and that his client was being made a scapegoat amid a charged political atmosphere in India. Dorsett went further, stating that there were “serious political elements involved” and that Choksi’s name was being dragged due to his past affiliations with Congress. He portrayed both Choksi and Nirav Modi as victims of a politically motivated witch-hunt rather than masterminds of fraud.
When Rahul Met Nirav?
Adding to the controversy, BJP national spokesperson Shehzad Poonawalla—who was a Congress insider at the time—alleged that Rahul Gandhi met Nirav Modi at a cocktail party in Delhi back in 2013. This meeting allegedly occurred while a whistleblower at Punjab National Bank was being silenced. The Finance Secretary during that period was Rajiv Takru, under whose watch the fraudulent loans were cleared without intervention. More troubling was the report that then-Finance Minister P Chidambaram had approved the termination of the whistleblower, suggesting potential political involvement in covering up the scam.
Donations to Rajiv Gandhi Foundation from Choksi-Linked Company
The Congress-Choksi connection runs deeper. Reports indicate that during 2014–15, a company named Naviraj Estates Pvt. Ltd.—where Mehul Choksi was a director—donated funds to the Rajiv Gandhi Foundation (RGF), headed by Sonia Gandhi. The foundation’s board also includes Rahul and Priyanka Gandhi. This came at a time when Congress was already under scrutiny for accepting funds from foreign governments, including China.
What raised further eyebrows was that RGF had also received donations from several Indian government ministries—such as Environment and Forests, Health and Family Welfare, Small Scale Industries, and even the Home Ministry—while the UPA was in power. These revelations point to a troubling misuse of public funds and raise serious questions about the overlap between political power, public institutions, and private interests.
Congress Fields Choksi’s Lawyer in Karnataka Polls
The Congress party’s association with figures linked to Mehul Choksi took a surprising turn when it fielded Choksi’s lawyer, H.S. Rajamauli, as a candidate in the Karnataka Assembly elections. This move was widely criticised as hypocritical—especially since Congress had earlier accused, without evidence, that Arun Jaitley’s daughter once legally represented Nirav Modi. The contradiction sparked backlash not just from rival parties but from within Congress itself.
Veteran Congress leader Brijesh Kalappa, a seasoned party voice, was passed over in favour of the relatively unknown Rajamauli. This internal snub stirred discontent and furthered factional rifts within the party. Meanwhile, the BJP seized the opportunity to highlight what it called Congress’s double standards and questionable alliances.
As Mehul Choksi’s legal battles unfold and extradition efforts progress, one undeniable truth emerges—the Rs 13,500 crore PNB fraud was made possible through a deadly mix of political cover, flawed policies, and regulatory apathy. Congress, through years of silence, questionable decisions, and political protection, helped lay the foundation for one of India’s biggest banking scams.
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