NEW DELHI: Even as the investigations by premier agencies into the Rs. 6800 crore loan default case of Winsome Diamonds and Forever Diamonds have hit a dead end, in a new twist to the case, questions have been raised over the role of some Independent Directors of the company and over the authenticity of the due diligence report authorised by the banks.

The investigating agencies had rested most of its case on the statements given by one of the Independent Directors and also on Kroll report which now has come under dispute both during investigations and in the court of law. In a related development, Diamond Intelligence Briefing (DIB) termed as world’s most authoritative, staunchly independent and widely quoted international diamond industry resource, and which was instrumental in breaking the story of investigations into synthetic diamond sales involving the above-mentioned company, has in its November 7, 2017 issue stated that it was misled into doing the story by one of the companyÂs Directors who pasted the “slightingÂÂ epitaph on them. They have accused certain vested interests and the Director of drawing DIB into overall fraudulent and corporate rivalry schemes in mindboggling scenarios. 

In fact, the investigating agencies had built up their case against J. R. Mehta in the loan default issue based on the Kroll report and statements of some Directors of Winsome Diamonds and Forever Diamonds. Sources in the know of things said the Kroll report has been found to be a non-professional job and was based on hearsay and pre-decided notions. The investigating agencies are apprehensive that the Kroll report and the testimony of the Independent Directors as well as Executive Directors will not stand water in the court of law and the case will fall through. 

Interestingly, the focus has now turned on the testimony of the directors and how there could wrong doing on their part and their attempts to nail Mr. Mehta in order to cover up their own wrong doings and the involvement of some bank officials is not ruled out in the matter.

In 2015, the two companies  Winsome Diamonds and Forever Diamonds — had filed cases in the Sharjah Federal Court arguing that the companies had suffered a business loss of $1 billion (Rs. 6,500 crore) due to non-payment from 13 UAE-based entities. The Sharjah court had ruled in favour of Winsome Diamonds and Forever Diamonds. In May 2017, UAEÂs Appellate Court upheld the Sharjah courtÂs verdict.

In fact, the Enforcement Directorate (ED) had send a Letter Rogatory to United Arab Emirates (UAE) seeking information on the two companies and Mr. Mehta. However, there has been no formal response from UAE till date to the LR but officials said that after the ruling by the UAEÂs courts, it is unlikely that UAE will cooperate in this case. Letters Rogatory is a formal communication in writing sent by a Court, in which action is pending, to a foreign court or Judge requesting the testimony of a witness residing within the jurisdiction of that foreign court. Interestingly, for UAE authorities to take action in the case, the crime has to be committed on its soil which has not been the case. The two government agencies are dependent on the United Arab Emirates (UAE) government for information about these two firms and as well as the 13 dealing firms who were connected in the main trading business.

Officials said with new facts coming up in the case, the premier investigating agencies and the consortium of banks will have to start looking at the role of the directors within the company as they are based out of India and can be subjected to scrutiny and investigations. However, the last word has not been said in the case but the Rs. 6800 crore loan recovery remains out of reach of the banks for now.