London:  A top haven for international fraudsters? 

What the devil is happening to Nirav Modi’s extradition case that should have seen him sent back to India years ago from London? A case that is getting even international press coverage. Of course, Nirav Modi is the Indian businessman charged with massive fraud against a well-established Indian bank, PNB. And, more importantly, why does […]

Nirav Modi
Nirav Modi

What the devil is happening to Nirav Modi’s extradition case that should have seen him sent back to India years ago from London? A case that is getting even international press coverage. Of course, Nirav Modi is the Indian businessman charged with massive fraud against a well-established Indian bank, PNB. And, more importantly, why does London seemingly attract and put up with so many apparent similar fraudsters and dubious characters in business from abroad?
Another fugitive who fled to London around five years ago after many of his Indian or related holdings went bust is Vijay Mallya. He owes hundreds of millions of dollars to an Indian bank consortium and has broken important court orders, including those on contempt and improper transfer of funds. According to the eveningstard.com, “He is on bail on an extradition warrant executed by Scotland Yard on 18 April 2017.” Five years later, they know he resides in London, and he does not even feel the need to talk to his lawyer about stopping extradition efforts to get him back to India.
On the higher profile case of Nirav Modi, why has this individual and his accomplice uncle, Mehul Choksi not been extradited given the over billion dollars of their outright thievery? In Nirav Modi’s case, it should have been from London years ago, and what could stop it from happening?
But first, I want to try and look at what might have motivated and supported his alarming, inexcusable behavior. Nirav Modi belongs to a major family and a major diamond retail empire. so large that it literally has thousands of outlets. It has been successfully operating for several generations. But an examination of the diamond industry shows it was badly hit by the Great Recession in the 2008–2009 period. A period when diamond prices dropped significantly. A period that was an indictment of the Wall Street and London Canary Wharf banking centers, whose greed and casino financial derivatives almost destroyed the entire western, if not global economy. Thus, in the fallout, credit dried up, but assets also became much more affordable. And ambitious Nirav Modi seeing the opportunity to buy a mainstay of an American diamond retail chain on the “cheap” looked to too “creative” ways to finance through fraud?  
Coincidentally, Nirav Modi began his fraudster scheme in 2010. That is corrupting officials at the Punjab National Bank by issuing fake Letters of Understanding (LoUs) to London-based banks to finance his takeover. And then, interestingly, she fled to London in 2018 when the fraud was discovered. Another coincidental London connection? 
After all, there has been growing concern that there is a culture of financial greed and expediency, aided by London-based finance. Just ask Lord Green, who, while head of HSBC, based in London, let hundreds of millions of dollars of Mexican drug cartel money be deposited in his bank. When there is a laxness about where the money is coming from, especially if the sums are great, those of the like of Modi and Mallya would likely have known this and why any ill-begotten loot had been transferred there along with themselves.  
Incidentally, Nirav Modi attended the Wharton Business School to which Donald Trump graduated in economics from and who assisted in inaugurating one of Nirav Modi’s New York stores. Another infamous character and Wharton graduate with strong London connections and residence(s) is Jho Low, also a descendent heir of a reputable family company but from Malaysia. He was a financial mastermind, ripping off many billions of dollars of Malaysian government money, aided by bankers with London connections.
A growing concern is that too many western business schools have got too caught up in pushing irresponsible, make quick, rich scheme thinking and not enough on business ethics. Appropriately, a fortune.com article led off with, “Are business schools sending “moral midgets” out into the world to recklessly plunder without regard for honesty and human decency?” 
So, it needs to be reflected on whether some of these approaches have also poisoned the minds of an ever-increasing number of Asians from well off families, even mom and pop shop size owners who pay top dollar to have their sons and daughters receive the top cachet branding of the Whartons and beyond. So, did this also impact people like Nirav Modi? Though a broad sweep of such an accusation is unfair, as demonstrated by the new UK prime minister, Rishi Sunak, an MBA graduate from Stanford who seems squeaky clean for now.
However, another important point is that UK finance had got too attracted to a level of loose bank deregulation à la America Wall Street that not only permeated business school thinking but even Downing Street and the regulators they oversee, which also dealt with offshore investors. For example, Boris Johnson and the British Tory Party were known to be friendly with several Russian oligarchs and their representatives, some of whom were major donors. That includes supporting laws that set up trusts and shell companies, making it difficult to know who owns what in real estate.  Meaning, that the criminally charged from abroad could own enormous amounts anonymously of property and hide their overall assets easily in London.
No doubt, Nirav Modi knew this at the time he started his fraud. And the complexity of the British legal system and the many lawyers opened to working with almost anyone with bags of money means London may be a great place to draw out against extradition pressures. 
Now, on how might Modi and his legal team might do so? According to the economictimes.com, “He still has an option to approach the (UK) Supreme Court on a point of law of public importance.” Yet, Nirav Modi’s legal team, after the recent high court decision denying that their client being sent back to India represents a suicide risk, would likely not be successful with such an appeal. And another approach through the European Court of Justice does not seem promising. Nirav Modi could be well back in India soon, but again, crafty London lawyers and friends there might come up with something that might delay extradition.
Now, London, after years of exposure as a haven for too many foreign crooks, may be trying to do something about this given the increasing bad publicity. Former Prime Minister May even promised to clamp down on Russian oligarchs. But justifiable worries are that too many of the unsavory fraudsters and unsavory offshore dealings will still be too much of the norm. The cases of Nirav Modi and Vijay Mallya underscore this and well beyond. And the need for better financial regulation and a more expeditious legal system in the UK to extradite these criminals. The sooner the better.
Peter Dash has researched extensive international finance and tax havens directly and indirectly for three books. He attended a top  MBA school in North America and was an Asociate at Harvard where he researched political structures.