RAPAPORT… De Beers has terminated the sightholder status of Gitanjali Gems following fraud allegations against the Indian jeweler’s managing director,
Mehul Choksi.
De Beers took the decision in February, meaning Gitanjali
can no longer make any purchases from the company, a spokesperson for the rough
producer confirmed in a statement to Rapaport News Monday.
“De Beers has introduced more rigorous financial compliance
criteria for sightholders that require full compliance for financial accounts
that started on or after January 1, 2017,” the spokesperson said. He declined
to comment on the Gitanjali case specifically.
In February, Punjab National Bank alleged that Choksi and
his nephew, jeweler Nirav Modi, had defrauded the lender of $2 billion by obtaining
unauthorized loans. Gitanjali’s share price has slumped about 90% since February 12.
Modi’s US-based diamond companies, Firestar Diamond, Fantasy
and A. Jaffe, were never sightholders, De Beers confirmed. Firestar has been a customer
of De Beers’ auction-sales business in the past, but that status is no longer
active, it added.
Gitanjali Loses Sightholder Status
The Bottom Line
- De Beers terminated Gitanjali Gems' sightholder status in February due to fraud allegations against Mehul Choksi.
- New financial compliance criteria for sightholders, effective from January 1, 2017, require full financial account compliance.
- Gitanjali's share price dropped approximately 90% since the fraud allegations surfaced in February.
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