Winsome Diamonds default case's fate hangs in balance

The Enforcement Directorate (ED) had last year sent Letters Rogatory to UAE seeking the information, but, it is yet to receive an official reply. In the absence of the reply, the investigating agencies seem to have hit a dead end.
Winsome Diamonds default case's fate hangs in balance

There has been a lot written about the jewellery exporter Winsome Group which has amassed over Rs. 6500 crore defaults on loans from the consortium of banks, in the last few years, since the reports started appearing in the various sections of media.

In 2015, the two companies- Winsome Diamonds and Forever Diamonds- had filed cases in Federal Court of Sharjah arguing that the 2 companies had suffered a business loss of $1.23 billion, which correlates to Rs. 7870 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 2016, UAE, Appellate Court upheld the Sharjah court’s verdict.

The Enforcement Directorate (ED) had last year sent *Letters Rogatory to UAE seeking the information, but it is yet to receive an official reply. In the absence of the official reply, the investigating agencies seem to have hit a dead end.

As per Diamond world’s earlier interview with Director - Winsome and Forever - Harshad Udani , the company still maintains the same stance that all the malicious reports appearing in the media are the wrongdoings of some of the full time Directors of both the companies. The Kroll investigative report (which has now been debunked by all agencies including the CVC, that it is based on hearsay without any proof) had also been responsible for the misleading media campaigns.

In a related development, Diamond Intelligence Briefing ( DIB) which was instrumental in breaking the story of investigations into Synthetic Diamond Sales involving a former subsidiary of Winsome in NYC , USA , has in its November 7 , 2017 issue stated that it was misled into doing the story by one of the company’s Directors who pasted the "slighting" epitaph on them . They have accused certain ‘Vested Interests’ and the Director of drawing DIB into overall fraudulent and corporate rivalry schemes in mind boggling scenarios. (In a letter to subscribers, the DIB publisher, Chaim Even-Zohar the DIB publisher said that since he is now in his 70s, and after 45 years in the industry, the time has come to rearrange his life priorities. The DIB is likely to be sold to an Asian buyer, which is appropriate since that is where the industry has shifted, Even-Zohar wrote.)

Talking more about the role of the executive directors in maligning the name of Jatin Mehta, company spokesperson said, "The statement of Ramesh Parikh and other executive directors are false. They have said that Jatin Mehta did not join the board as he was expecting some problems from April 2011, and more so, before the board meeting which appointed the new full time directors on May 09 2012 . Here, at least, Chaim has brought in the dates which are clear that the directors are lying to absolve themselves of the responsibility. Till May 21, 2012, the first article published by Chaim, nobody knew of such an event. Whether it is true or not is different, but the public noise was made after the first article. Therefore, the statement by the directors that Jatin Mehta was aware of such an event before the board meeting of May 09 2012 is an outright lie. The agenda of a board meeting is distributed 7 working days before a board meeting is to be held. Not to say that Jatin Mehta had settled outside India since April 2011 and relinquished the post of MD."

The company has been embroiled in the default case since March 2013. As per last information, funds are drying up at company’s end and whatever little earnings the company is able to make is blocked by the banks. For the company, it is only wait and watch, till the Justice is served. For the shareholders of the company, they are yet to understand why they lost their investments – is it the negligence of the directors or the callous attitude of the banks not to make any settlement with the Foreign Buyers or both.

*Letter 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.

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