Three people arrested after $1.8bn stolen from single bank branch and billionaire jeweller 'flees to New York'

Lydia Smith
A billboard featuring actress Priyanka Chopra promoting Nirav Modi jewellery is pictured in Mumbai: AFP/Getty Images

Three people have been arrested in connection with a $1.77 billion bank fraud in India.

Punjab National Bank, the country’s second-largest state-run lender, announced it had been hit by a scam on a huge scale earlier this week.

Two employees, Gokulnath Shetty and Manoj Kharat, are suspected of steering fraudulent loans to companies tied to billionaire jeweller Nirav Modi, who owns the jewellery brand Firestar Diamond, and his uncle Mehul Choksi, chairman of jewellery retailer Gitanjali group.

A third person, Hemant Bhat, has also been arrested, according to a police source.

In a statement issued on Wednesday, the bank said it had “detected some fraudulent and unauthorised transactions in one of its branches in Mumbai for the benefit of a few select accounts holders”.

Bank officials say the scam appears to have begun in 2011 and occurred at just one Mumbai branch.

Many of the details of the fraud remain unclear, including whether all the $1.8bn is missing or if some money may have been used to repay earlier loans.

Authorities have not publicly charged Mr Modi and Mr Choksi, but say they are under investigation for allegedly cheating the bank using fake documents.

The whereabouts of Mr Modi is unknown, but Indian broadcaster NDTV reported on Friday he was at a hotel in New York, according to staff.

He has not yet commented on the claims and Firestar Diamond previously said the case was not connected to the company.

Mr Modi, 47, is the owner of 17 jewellery boutiques around the world, with branches in Asia, India, the UK and the US.

His jewellery has been worn by Hollywood and Bollywood stars, including Kate Winslet and Priyanka Chopra.

According to Forbes, he is worth $1.74bn and is 85th on India’s rich list.

Additional reporting by agencies.

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