PNB fraud: India asks Hong Kong for Nirav Modi's provisional arrest; China can be a hurdle

Finally, after two months the Indian government has been able to locate fugitive diamond merchant Nirav Modi. The government has confirmed the whereabouts of Firestar Diamond owner, who's the main accused in the Rs 13,700-crore PNB fraud, saying he is living in Hong Kong. To stop him from moving to a different country, the government has approached the authorities in Hong Kong for his provisional arrest. Hong Kong is a Special Administrative Region (SAR) of China. Reports suggest that China, which though rarely interferes in Hong Kong's legal process, might be a hurdle in the businessman's extradition.

The Ministry of External Affairs (MEA) submitted a request to the Hong Kong authorities for Nirav Modi's provisional arrest on March 23. He is the prime accused in the Rs 13,700-crore PNB loan fraud.

Submitting a written response on Nirav Modi and Mehul Choksi's whereabouts in Rajya Sabha on Thursday, Minister of State in the Ministry of External Affairs VK Singh said: "The ministry has sought the provisional arrest of Nirav Deepak Modi by the Government of the Hong Kong Special Administrative Region, Peoples Republic of China, for which a request has been submitted to them on March 23, 2018."

He also said the Indian government was in talks with the Chinese government over the issue. The Central Bureau of Investigation (CBI), which is investigating the case along with the Enforcement Directorate (ED), is also exploring all possible options to bring the fugitive businessman back.  On the CBI's earlier notice to Nirav Modi to return to India to join the probe, he had said through an email that he has "business outside, so can't join the investigation."

He said the MEA had earlier served them the show-cause notices to explain why the government should not revoke their passports. The government had revoked their passports on February 23 after they failed to respond to the suspension notice in time. "Since they failed to respond within the stipulated time period, their passports were revoked on February 23, 2018," Singh said.

The provisional arrest can prove to be a major step in stopping Nirav Modi from moving out of his current location. Both the businessmen fled the country in the first week of January, around a month before Punjab National Bank came out with a revelation that it had detected a fraud worth several thousand crores of rupees at its Brady House branch in Mumbai.

According to a report in India Today, India's envoy to Beijing, Gautam Bambawale, met with top Hong Kong officials just days before the March 23 request was submitted, although his official visit to the HK SAR (Hong Kong Special Administrative Region) from March 18 was said to have been arranged in advance and not connected to the Nirav Modi case.

The report says the law in Hong Kong gives the region "independent judicial powers, including that of final adjudication" but its judiciary has no power in issues related to "defence and foreign policy".