Dubai conference that led to diamantaire Jatin Mehta and family being cornered
Buried deep under reams of court documents, complex arguments, and lengthy rulings by the high court in London lies the riveting details of how Standard Chartered Bank and Grant Thornton managed to corner fugitive diamantaire Jatin Mehta and his family in faraway London
Buried deep under reams of court documents, complex arguments, and lengthy rulings by the high court in London lies the riveting details of how Standard Chartered Bank and Grant Thornton managed to corner fugitive diamantaire Jatin Mehta and his family in faraway London.
A decade after Mehta, his wife Sonia, and sons Suraj and Vishal allegedly carried out a $1 billion fraud involving 15 banks in India, HT can reveal that the seed for the legal mess in which the Mehtas find themselves was sowed in a global conference involving legal and consultancy firms in Dubai in November 2021.
Before we come back to this Dubai meet, it is pertinent to mention that sometime in 2019, Standard Chartered Bank had teamed up with Grant Thornton, an accountancy major and global asset recovery specialist, to recover dues from the Mehtas as a result of their default in relation to the bullion loans advanced before 2013. It is noteworthy that the 14 remaining banks were not part of this exercise.
While Standard Chartered Bank was keen to recover its due, the remaining 14 banks were not willing to come out in full support of pursuing the Mehtas. Grant Thornton representatives made several trips to India - Mumbai and Delhi - to meet bank officials but realised that it was going to be a difficult task to get the Indian banks on board. They also realised that getting approvals from the banks required multiple processes which were stymied by the need to get a positive nod from various departments and individuals.
Conscious of the fact that legal action could be impeded due to limitation clauses, Standard Chartered Bank and Grant Thornton went ahead even though banks with much bigger exposure seemed reluctant to join efforts. The banks had mounted criminal complaints in India, but due to the fact that the Mehtas were no longer in India the probe was scuttled. Both the CBI and the ED had launched investigations but nothing happened to the Mehtas. Standard Chartered Bank had thus sensed that to get their dues they would have to move beyond the jurisdiction of India.
This collaboration agreement propelled by a litigation funding agreement set in motion a series of steps that were planned to corner the Mehtas. The first public indication of this came out when a specialist working for Grant Thornton made a presentation titled “Case study of a billion dollar multi-jurisdictional fraud” which was anonymised but based on the case of the defaults by Winsome Diamonds and Forever Diamonds.
But also present in that conference was an associate of UK-based Jones Day solicitors, who were advising the Mehtas at that time, who took copious notes from that presentation. Whether that associate was present by accident or design still remains contested, but we get an indication of the fierce legal fight, when lawyers for Mehta had sought to halt proceedings in English courts by derisively presenting “Grant Thornton scheme” as the fountainhead of an artificial contrivance.
The coming together of Standard Chartered Bank and Grant Thornton led to a series of steps, the first of which was the former successfully managing to restore to the company register four UK-registered companies that were ultimately related to the Mehtas, but underwent voluntary liquidation on their instructions. This action resulted in Grant Thornton being appointed the official liquidator, who then mounted a case against the Mehtas for using these companies as a conduit for fraud and misappropriation. This was also made possible due to the fact that the Indian banks who although did not collaborate with Grant Thornton, did not object to its appointment as the liquidator. If the banks had raised objections to Grant Thornton being appointed the liquidator it would have been difficult for the case to move further.
This revival of the case against the Mehtas by the restoration of companies became the starting point of the legal process against them in the high court in London. In May 2022, the liquidator managed to get a worldwide freezing order to the tune of $930 million against the Mehtas, which also included a passport order and to give a list of assets.
Stung by the order as a result of a private hearing, the Mehtas opposed the actions and stated that the case should be thrown off as 14 of the Indian banks were not part of the proceedings and had chosen to pursue them only in India.
During submissions in the court, Grant Thornton had said that they anticipated the participation of Indian banks who seemed reluctant to spend money in pursuing their claims due to a variety of reasons, but were likely to submit proof of debt as the case would progress. That seems to be a correct proposition because apart from Standard Chartered Bank, at least four banks have now lodged documents with the court.
“The Grant Thornton scheme amounts to an abuse of the corporate insolvency regime and an abuse of the process of the court,” the Mehtas said. They have also alleged that Grant Thornton is likely to have “negotiated a 50% share of any recoveries”. HT asked Grant Thornton whether they stood to earn 50% of the recoveries but they refused to comment, saying the matter was sub-judice.
All through the multiple hearings the “Grant Thornton scheme” has figured prominently, and at one stage Grant Thornton liquidators objected to the nomenclature saying that the description carried unfair connotations. The high court in London has finished hearing arguments based on the application by the Mehtas that India, and not the UK, is the correct jurisdiction for the case against them. Justice Edwin Johnson has reserved judgment, but unsurprisingly the “Grant Thornton scheme” again figured prominently in the arguments.