India's Enforcement Directorate Wants Info From UAE on Winsome Group

Legal
17/06/2016 08:52

India's Enforcement Directorate (ED) has requested information from authorities in the United Arab Emirates relating to the Winsome Group. Winsome Diamonds and Jewellery owes in excess of $1 billion to a group of banks. In addition to the ED which is looking into money laundering allegations, India's Central Bureau of Investigation is investigating several people connected with Winsome, The Economic Times of India reports. Winsome says it cannot repay the Indian banks due to massive derivatives losses suffered by its clients in the UAE, but the banks and Indian enforcement agencies want to discover the money trail and identify the identities of the firms which profited from the derivatives deals.

All 13 Dubai clients which did not pay up were controlled by Jordanian national Haytham Ali Salman Abu Obidah. Winsome says the firms are genuine and separate from Jatin Mehta who formerly controlled Winsome. Officials are seeking to verify this. Industry journalist Chaim Even-Zohar claims in his Diamond Intelligence Briefs newsletter this week that the insurance policies and shareholdings of offshore firms indicate that some of Obidah's companies had closer links with Winsome than claimed.

The financial institutions in the banking consortium are PNB, Standard Chartered, Bank of Maharashtra, Canara Bank, Central Bank, Exim Bank, Oriental Bank, State Bank of Hyderabad, Union Bank, Axis Bank, Vijaya Bank, Bank of India, State Bank of Mauritius, IDBI and Syndicate Bank. They issued standby letters of credit in favor of international bullion banks which supplied gold to Winsome Group. The arrangement was if Winsome failed to pay the bullion banks, Indian banks would step in to pay for the gold consignment. The agreement between Winsome and the bullion banks was such that a single default could accelerate the repayment and encashment of the quasi-guarantees, the Economic Times added.

Meanwhile, Even-Zohar claims that the synthetic diamonds produced by IIa Technologies of Singapore and Malaysia headed by Jatin Mehta, and sold by its US marketing arm, Pure Grown Diamonds, could be declared the result of money laundering. The UAE-based companies that didn’t pay the Indian companies controlled by Mehta which sparked $1-plus billion bank loan default, were actually controlled by Mehta. Even-Zohar claims that most of the UAE firms were actually just front bodies that did not have the require staff or facilities to store diamonds and jewelry. The UAE companies were all owned by Haytham Ali Salman Abu Obidah, who Even-Zohar says worked for Winsome for the past eight or nine years. His report shows the incredibly complicated financial structure established to cover up ownership.