Last month, after three years of investigation, the CBI booked six cases against Winsome Diamonds and related companies. In light of what has happened, Harshad Udani, Director, Winsome Diamonds, tells Diamond World what is fact and what is fiction and clears the air about Jatin Mehta’s whereabouts.

There has been a lot of conjecture about Winsome Diamonds since the investigation of the company began three years ago. The company and its promoter Mr. Jatin Mehta has been brought to spotlight by the media, branding him as one of the country’s biggest defaulters. In 2011,

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the company was granted over Rs 3000 crores by 14 banks. In 2012, Jatin Mehta resigned from the company and held Winsome’s UAE customers responsible for the company’s inability to repay the loans. In his claim, he said that the UAE Jewellers were unable to repay the loan.

In 2014, the banks approached the CBI. The CBI along with the Economic Offence Wing of Mumbai raided Winsome’s offices. Three years later, the CBI has booked six cases against the company. A lot of allegations have been made against the company by the media. In fact, in a recent letter to its Board of Directors, Mr. Mehta has said that these allegations are untrue and that the media has led this campaign against the company in collaboration with a few eminent personalities in the diamond industry. These personalities were unavailable to give a comment on the said allegation.

In your recent letter to the BSE, you have mentioned the Minutes of Lenders Consortium meeting that took place in September 2013 and how it discredited the Kroll Report. Based on what did it discredit it?

This meeting was attended by all the banks. Ms. Reshmi Khurana of KROLL informed that it has not audited any books of accounts of any establishment nor does it have access to any. She said that the report is based on market intelligence after conducting interviews with various personalities in which case no documentary evidence is possible. She further informed that modalities of our investigation were exchanged with the officials of SCB the Lead Bank of Winsome Diamonds & Jewellery Ltd.

She confirmed that the report is based on “hearsay” and when asked “How the ownership in all the 13 companies has been established in view of the fact that report of another investigative audit report, due diligence report of D& B have Found,” she informed,“Kroll report is based on information available from Corporate Registry office Dubai.”

You have said in your statement, that the case filed against you is political vendetta created by the media at the behest of your business rivals. But the CBI apparently has hard evidence on the diversion of funds. What do you have to say about this?

The media has been misled because of the “false Kroll report”. The Sharjah Federal Courts have given a verdict in favor of the company after having Banking and Accounting experts make an audit of the customers companies. There has been no diversion of funds. The bank has also done an E & Y report on Winsome and found no diversion of funds.

The best evidence is in the banks’ case filed at DRT, Ahmedabad (Standard Chartered Bank vs. Winsome Diamond and Jewellery Limited - O.A. No. 304 of 2014 and against Forever Precious Jewellery and Diamond Limited - O. A. No. 174 of 2014), where the banks have specifically stated that the goods have been sold, supplied and delivered by the companies to its customers at UAE and the customers in turn have defaulted by not making payments. Apart from seeking decrees against the companies for the repayment of debt, the banks have sought further orders that the UAE customers deposit their dues to the companies directly into the designated account. Decrees have been passed by the DRT on this basis.

The general consensus seems to be that the 13 UAE-based buyers are covertly operating with Winsome to siphon funds. How do you refute this?

The records maintained by the banks for the last 20 years will confirm the fact that Winsome followed prudent policies for ensuring its continuous growth whether in terms of its reserves and surplus, its net worth, its fixed assets, its turnover, etc. The records maintained by the banks would also show that at all times the banks had accepted the soundness of the operations, business and working of Winsome, which made Winsome, a leading company in the gold and diamond jewellery industry in India. The banks were always in the know of the working operations and financial status of Winsome. The banks held several meetings to review the data, information and operations of Winsome.

The said CMA data was extensively analyzed by the banks, which, whenever required, also sought for additional data and information for its assessment of the credit requirements of Winsome. In fact, Standard Chartered Bank, who was only a SBLC facility provider, entered into the business of providing Bullion supplies. Standard Chartered Bank was therefore, the beneficiary of both ends of the transaction. Standard Chartered Bank (Mumbai) was instrumental in proposing and initiating Standard Chartered Bank (London) in becoming a bullion supplier. It has come to our understanding that Standard Chartered Bank (Mumbai) received benefits from the bullion supplies made by Standard Chartered Bank(London). This demonstrates the tremendous confidence and unconditional acceptance of the Winsome’s business model.

The loans were sanctioned by the banks after a thorough due diligence on the UAE customers through D&B reports. Over the last decade or so, Winsome has made sales and received approximately USD 1.91 billion from the UAE customers. The reports of the Sharjah Federal Courts confirm that these were business losses. There is no question of any covert operations or siphoning. Even today, Winsome and Forever are making all attempts to recover the monies from the UAE customers.

Can you tell us why a credible bank like Standard Chartered (and other banks) should bear a personal vendetta against Winsome Diamonds?

The records maintained by the banks for the last 20 years will confirm the fact that Winsome followed prudent must open an Enquiry in to the acts of Standard Chartered Bankand then they will be able to find the truth. The representatives of Standard Chartered Bank, visited UAE along with the representatives of Winsome and other banks on several dates to meet Mr. Haytham and discuss the process of repayment of the outstanding amounts from the UAE customers. This evidently proves that Standard Chartered Bank has always been aware that the UAE customers are the ones that have defaulted in payments, which in turn proves that there has been no case of fraud, siphoning of funds or even willful default by Winsome.

Standard Chartered Bank’s mala fides and vendetta is exposed from the DRT proceedings. Because it is a court document, Standard Chartered Bank has stated the truth that the companies suffered a business loss. But consortium Banks led by Standard Chartered Bank continues to file criminal case despite the bank admitting and obtaining a decree on the basis that it is a genuine business loss.

This is again news floated by Standard Chartered Bank and its cronies. Jatin Mehta had left India in April 2011. He had given up all his executive positions for settling out of India. For personal reasons, he took the citizenship of St. Kitts and Nevis. This was much before the defaults took place. We would like to inform you that though Jatin Mehta relinquished his executive position, he still continued with his personal guaranty for Winsome and Forever. Jatin Mehta has been contactable by the company directors and banks all through this period. He was at the meetings that took place between the customers, Directors of Winsome, and representatives of State bank of Mauritius. A settlement has been reached between the customer and State bank of Mauritius. Jatin Mehta runs his own business since 2012 and the banks and agencies also know this.

A plausible link has been established between the alleged money laundering and Singapore-based IIa Technologies and US-based Pure grown diamonds. How do you deny this?

The word “plausible link”is baseless and inflammatory. Let me correct you - there has been no money laundering. As mentioned in earlier replies, the customers have suffered a business loss, which has been now confirmed by the report with evidence submitted by the Banking and Accounting Experts to the Sharjah Federal Court. Both the Decrees of the Debt Recovery Tribunal in India as well as the Decrees by the Sharjah Federal Court clearly prove the Kroll report to be Fictitious and any money-laundering allegation to be untrue. Both the Decrees in India & UAE have clearly stated business losses as the reason for the default.

In his report in Diamond Intelligence, Chaim Even-Zohar suggested that many of the UAE-based companies are in fact one-room offices with not enough staff or facility to store diamonds and jewellery. Is his allegation baseless?

All the offices were located in Sharjah Free Zone Export area. The government of Sharjah owns the area and it allots offices to different businesses. It is fully secured and protected. This allegation was made in the created Kroll report. Winsome has been working with these customers since 2005-2006. We are not aware if this Kroll report was created by Mr. Chaim Even-Zohar along with Standard Chartered Bank.