Did Nirav Modi predict his own crash?

A new book talks of the tainted diamond mogul's child who lost his mum at the age of eight, the teenager who blackmailed friends over cigarettes and drinks, well known in social circles, yet, unfamiliar in the industry

On Wikipedia, diamantaire Nirav Modi carries the unenviable status of being India's "most wanted". If this was the late 1990s, a notorious distinction of this kind would have landed him a berth in Suhaib Ilyasi's erstwhile crime show. In 2018, where TV news channels had replaced the Ilyasi potboiler, Mumbai-based Modi became a household name instead. Known for his eponymous jewellery brand, Modi and his uncle Mehul Choksi were alleged to have spearheaded one of the biggest bank frauds in the history of the country, swindling the Punjab National Bank (PNB) to the tune of USD 1.8 billion. 

A new book, Flawed: The Rise and Fall of India's Diamond Mogul Nirav Modi (Hachette India) by Pavan C Lall offers an account on the man credited with creating India's first truly global luxury company, and the scandal that saw investigative agencies across three countries in his pursuit. "Modi may be dismissed by society as a person of no consequence now, but when he was here [in Mumbai] running his business—he was something of a buzzword," says Lall, a city-based business journalist. "A mysterious central character with a large-than-life game plan, an Indian business looking to go international and in some ways actually did, and a house-of-cards collapse that no one saw coming." It was the kind of story Lall wouldn't have wanted to give a miss.

Challenging childhood 

When Lall set about researching for his book, he was surprised "by how few people in a small community of jewellers that included mainly Palanpuri Jains and Marwaris actually knew the man personally". For somebody who was known to be a sophisticated and daring entrepreneur, his reclusive nature made him somewhat of an outsider among his peers. When Lall met Modi in 2015, the diamond businessman had actually challenged the journalist: "Ask any jeweller in Mumbai if has met me in the last decade and the answer you'll get is 'no'." Lall tested the statement, when he met at least five jewellery company CEOs. "Each had a view on the man, but none had met him," Lall writes in the book. His maternal uncle, Choksi, was the more popular man in the trade. 

Born in 1971, Modi was raised in Antwerp, Beligum, where his father Deepak Modi had moved after marrying Gita Choksi. When he was around seven or eight, Gita died unexpectedly. Those known to the family said that she had fallen off a building in Belgium. His father then remarried an interior designer. Growing up Modi, a student of Antwerp International School, actually wanted to become a music conductor, a childhood friend had told Lall. But even as a kid, he displayed traits that "veered beyond just being a self-conscious child, to the point of being controlling by nature". "During socials and get-togethers, the same childhood friend shared that 'he [Nirav] would quietly take photographs of classmates who were lighting up a cigarette or chugging their first beer… Especially if they were Indians in Belgium'. Those photographs would later be used by him as leverage for favours," Lall writes in the book.  

In 1989, Modi attended the Wharton School of Business. By then, he had moneyed aspirations, with dreams of becoming an investment banker on Wall Street. But, he dropped out and returned to Belgium a year later. The rumour, as the author says, was that his father's business went awry. 

"What my research and interviews indicated were that the real Nirav Modi was the product of a challenging childhood. He lost his mother at an early age, and that is difficult for anyone. He maintained that he was a third-generation diamantaire, but that wasn't entirely true. His grandfather [Keshavlal Modi] was more of a trader than an established jeweller and while his father did settle in Belgium with a finger in the diamond trade, he also came close to bankruptcy. Those were clearly tough years," says Lall, in an email interview.  

Learning from the genius 

Modi returned to Mumbai in 1999, where he worked with his uncle Choksi, who helmed Gitanjali Gems, till 2001. Modi, Lall writes in the book, was an "eager young apprentice" who found his uncle to be a genius. "It was clear that he looked up to Choksi."  

Why then, did this partnership fizzle? "Their styles of doing business were very different. Modi was raised in Europe, while his uncle was a dyed-in-the-wool Palanpuri Jain Mumbai jeweller," says Lall. "That being said, Modi wouldn't have gotten as far without his uncle's guidance, given that the circle of influence in socio-business circles were mostly Choksi's and not the nephews, to start with," he adds. It's why their association continued, despite their independent businesses. 

The young Modi went on to start Firestar International Private Limited, whose revenues crossed Rs 400 crore by 2004. He had arrived. 

Unlike his grandfather, who was "frugal to a fault", Modi was more, in your face, with his show of wealth. "But, the global, sophisticated entrepreneur with a penchant for the good life was one face," says Lall. "He was also a solid researcher, for example, and would study concepts, ideas and projects deeply before jumping into them. The word is that he researched decades' worth of Christie's catalogues to understand how and what made it on the cover before sending jewellery pieces to them for auction."  

 His art collection could have made anyone green with envy—from FN Souza to Ravi Varma, VS Gaitonde and Jitish Kallat, Modi who described himself as an "entrepreneur and art aficionado" had every Indian master on his wall. "While some wealthy folks genuinely see art as a leisure passion it has been a classic tool to gain upward mobility and rather quickly. Across the world, hedge fund billionaires, dot com gurus and the recently arrived all look to art as an alternate investment, but also a passport to credible social circles. That's not to say he didn't genuinely like good art. Of course, he also had the best advisers guiding him, in addition to doing the deep research himself," says Lall. Some of these artworks were auctioned earlier this year, to recover his outstanding tax dues. 

Pavan C Lall

When his eponymous brand, Nirav Modi, opened globally starting 2015—boutiques in New York City (Madison Avenue), Hong Kong and London (Old Bond Street)—Modi also went international. Lall met Modi over half a dozen of times during this period, interviewing him for the business magazine he worked with. "In the beginning, he was perfectly composed, confident about his business model as well as prospects of going international with his brand. By the last time, however, [at his store in Kala Ghoda in 2017, right after his offices were raided by tax inspectors], he was visibly stressed, but still holding on to the prospect of making his brand sail. The rush to move ahead had become more pronounced. I remember asking him about the company's long term strategy and I remember his answer: 'In the long term, we'll all be dead,' indicating that he was operating on some kind of tight timeline for his business." 

Downward spiral

It was in February 2018 that the CBI filed a complaint against him for defrauding PNB, the country's second-largest public-sector bank. "The crux of the alleged fraud lies in Modi's creation of sham import transactions to support requests for financing in the form of LoUs from PNB. These transactions involved the transfer of stones and money in Modi's direction without any economic purpose in order to create the appearance of import transactions to support the fraud," Lall writes in Flawed. Modi was arrested in the UK in March this year. His retail and trading ventures under the Firestar name in India have either been shut down or are under investigation. The companies of Choksi—he is said to be hiding in Antigua—share the same fate.

Looking back, Lall, who took nearly a year to research this book, says that the scam stood out, because "it was built on what appeared to be a genuine desire to build a real luxury brand." "According to his former employees, Modi actually did pay loads of attention to create a luxury company. From his logo to the products, to the marketing and down to the team he assembled were in many ways path-breaking for his industry and he did achieve what no one else had, in many ways. There was speculation, but exactly how and what he was doing remained a mystery which is perhaps why the scam caught everyone by surprise." He adds, "He was driven to succeed no matter what the cost and if the allegations are true it's somewhat tragic because he actually did have all the ingredients to make a luxury diamond company fly, expect for one vital link in the chain: The ethics to raise working funds honestly."

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