The Mehul Choksi scam: A billion-dollar fraud Congress didn’t stop, RBI didn’t see
On 12th April, fugitive jeweller and one of the key accused in the ₹13,500 crore Punjab National Bank (PNB) fraud, Mehul Choksi, was detained by law enforcement authorities in Belgium. The development came following a formal extradition request put in place by the Government of India. According to reports, Choksi had been living in Belgium with his wife Preeti. He had managed to secure a residency card.
His arrest is a welcome step, as it will someday lead to the final closure of the fraud case. However, as his name has surfaced again, the crucial question remains. How did he manage to carry out one of India’s biggest banking scams and leave the country? To understand what led to the current status of the case, one has to follow the breadcrumbs left by the UPA government. When the seed of this scam was sown, the Congress-led UPA was in power and Raghuram Rajan was the Governor of the Reserve Bank of India
Congress and RBI’s silent spectatorship
Over the years, OpIndia has extensively reported on the scam and explained its background. Started in 2011, the PNB scam, amounting to a whopping ₹13,500 crore involved Mehul Choksi and his nephew Nirav Modi when the UPA was in power. The fraud continued unhindered for years despite several red flags raised by the concerned officials.
During that period, the Congress government turned a blind eye. What was more shocking was that the Reserve Bank of India, under then-Governor Raghuram Rajan, failed to take any serious steps to stop the misuse of Letters of Undertaking (LoUs). These LoUs were being used to siphon massive loans without any proper collateral. Furthermore, the same fraudulent instruments were repeatedly issued without triggering any alarm at the bank level or under RBI oversight. In short, it was institutional laxity at best, wilful blindness at worst.
The 20:80 gold scheme: A parting gift?
The day was 16th May 2014. Lok Sabha election results were announced. The Modi-led Bharatiya Janata Party was set to come to power. However, it was still not over for the Congress. UPA remained the caretaker government till PM Modi took oath. Several suspicious decisions were made by the outgoing Finance Minister, P Chidambaram. In a final act of generosity, he signed an order that directly benefited 13 companies, including Mehul Choksi’s infamous Gitanjali Gems.
This was under the controversial 20:80 gold import scheme that allowed “star trading houses” like Choksi’s to import gold and sell 80% of it in the local market. The scheme encouraged hoarding and speculation, which artificially inflated gold prices manyfold. The warnings from trade bodies were conveniently ignored by the Congress government and the RBI under then-Governor Raghuram Rajan. This policy laid the groundwork for fraud of massive proportions.
The Congress narrative vs their own complicity
Before explaining further, it must be noted that in 2023, Interpol decided to drop Choksi from its Red Corner Notice list. All hell broke loose in the political playground of India. The Congress Party went on the offensive and targeted Prime Minister Modi. Congress President Mallikarjun Kharge accused the Modi government of ‘protecting’ Choksi and misusing central agencies like the ED and CBI against opposition leaders.
Several other senior leaders of the Congress party, including Supriya Shrinate, Randeep Surjewala, Jairam Ramesh and Shama Mohamed, followed suit and flooded social media with insinuations and poorly crafted conspiracy theories.
Ironically, the attack on the Modi government came from the party that had aided Choksi’s rise—and now they were crying foul over his evasion.
‘Loose alliance’ with Congress: Lawyer’s explosive claim
In August 2018, Mehul Choksi’s lawyer David Dorsett made a revealing statement. He spoke to Republic TV and claimed that Choksi was in a “loose alliance” with the Congress Party. He added that the political climate in India at that time was heated, and Choksi was made a scapegoat.
His words were not vague. In fact, he pointed to “serious political elements involved” and went on to suggest that Choksi was a political tool. He further claimed that his client’s name was inflamed due to his past connections with the Congress party. He also described Nirav Modi as a scapegoat and attempted to cast the fraud as a mere witch-hunt.
His statement was a critical insight into the political connections that may have shielded Choksi for years.
When Rahul met Nirav?
Going back to 2013, according to BJP national spokesperson Shehzad Poonawalla, who was with the Congress at that time, Rahul Gandhi allegedly met Nirav Modi at a cocktail party in Delhi. This was during the time when PNB’s whistleblower was allegedly silenced by the Finance Secretary under UPA rule. Who was the Finance Secretary at that time? Rajiv Takru, whose tenure saw the fraudulent loans being sanctioned—and he did not blink once.
Adding fuel to the fire, reports suggested that then-Finance Minister P Chidambaram had signed off the termination of the whistleblower. This raised the possibility that efforts to suppress internal warnings about the fraud were not only bureaucratic, but also sanctioned at the political level.
Donations to Rajiv Gandhi Foundation from Choksi-linked company
The Congress party’s questionable links to Choksi did not stop at political meetings or, in fact, favourable policies. Reportedly, in 2014–15, Choksi made donations to the Sonia Gandhi-led Rajiv Gandhi Foundation through a company named Naviraj Estates Private Limited. Choksi served as a director in this company.
This revelation came at a time when the Congress party was already facing scrutiny for receiving funds from foreign governments, including that of China. RGF, whose trustees include Sonia, Rahul and Priyanka, receiving money from a scamster like Choksi only deepened suspicions.
What is further interesting to note is that the foundation received funds from Indian government ministries including Environment and Forests, Health and Family Welfare, Small Scale Industries, and even the Home Ministry when UPA was in power. It is not just shady, but a clear misuse of Indian taxpayer funds.
Fielding Choksi’s lawyer as Congress candidate
Congress’s love for those linked to Choksi did not stop here. They fielded his lawyer, HS Rajamauli, as a candidate in the Karnataka Assembly elections. Ironically, they had previously criticised—with false claims—that Arun Jaitley’s daughter once represented Nirav Modi.
Their hypocrisy was not only criticised from outside the party but from the inside as well. Veteran Congress leader Brijesh Kalappa was overlooked in favour of Rajamauli, who was a new face. Congress’s actions triggered infighting within the party, and the BJP got a sharp stick to beat them with.
Conclusion
While the political and legal drama around Choksi will continue for years to come, one fact stands tall—that his scam was enabled by a cocktail of political patronage, policy negligence, and regulatory laxity. The Congress party built the house of the infamous ₹13,500 crore scam through policy decisions, political protection, and possibly donations as well. The RBI under Raghuram Rajan, with its wilful ignorance, failed to douse the fire in time. And now, as India attempts to bring Choksi to justice, the very architects of his rise play the victim.
The truth, though inconvenient for some, is a must to explore as the case further unfolds.
News