Lawyers for Jatin Mehta said in a court statement last week that the Indian subsidiary of Standard Chartered Plc and liquidation company Grant Thornton used a "sleight of hand" to get the unwarranted May freezing order. Mehta is "as much a victim of what happened as the consortium of banks," according to lead lawyer Andrew Hunter, who is attempting to reclaim $932 million in his client's assets.
Mehta's is one of the most high-profile bank fraud instances in India's diamond business, which accounts for around 90% of the world's supply. In the last decade, a succession of fraud claims have left a $8 billion hole in India's financial system and resulted in repeated indictments and extradition efforts against tycoons who fled the country, notably Vijay Mallya and Nirav Modi. Both men have rejected the charges and are fighting their own lawsuits.
According to Grant Thornton attorneys, Mehta falsely defaulted on nearly $1 billion in loans to his two firms, Winsome Diamonds and Jewellery Ltd. and Forever Precious Diamonds and Jewellery Ltd., in 2013, leaving 15 Indian banks unpaid. Mehta then reportedly laundered the money through a network of companies throughout the world, which he subsequently used to fund the growth of his laboratory-grown diamond company.
According to court records, Grant Thornton is serving as liquidator for the entities allegedly used by Mehta to launder money and would restore any money recovered to the Indian lenders.
Mehta, who rejects the accusations, claims he pioneered the business of lab-grown diamonds in order to compete with the traditional diamond industry. Such diamonds are formed from slithers of diamond known as'seeds,' which are subjected to intense heat and pressure to build a bigger crystallised stone comprised of pure carbon.
According to Mehta's attorneys, the industry has launched a continuous and unfair attack on the entrepreneur, and the bank and Grant Thornton are part of a "conspiracy" to unfairly sue him in the UK and profit themselves. Standard Chartered and Grant Thornton declined to comment for this article. Grant Thornton lawyer Ian Wilson accused Mehta of inventing problems when none existed. "The one area where money should not remain is in Mehta's hands," he stated in court. The court is expected to rule in the coming weeks.