Indian Prime Minister Narendra Modi is in hot water after a photo surfaced of him with billionaire jeweler Nirav Modi, who is at the center of the biggest banking scandal in the country’s history.
According to Bloomberg, the photo showed the prime minister posing at the World Economic Forum in Davos on January 23 with a large business delegation that included Nirav Modi.
The PM’s opponents immediately went into attack mode, questioning Modi’s commitment to fighting corruption, which has been a crucial part of his promise to voters. Even one of the prime minister's coalition partners expressed his doubts about Modi’s agenda.
Last month PNB announced that it had discovered $2 billion in fraudulent activity at one of its branches.
The scandal involves firms associated with Modi and his uncle, Mehul Choksi, who heads jewelry retailer Gitanjali Gems. The allegations, which go as far back as 2010, involve the firms receiving fraudulent letters of undertaking (LoUs) from the Brady House branch, which allowed them to then borrow money from overseas banks.
The bank also alleged that Modi took advantage of the inexperience of junior banking personnel to receive the letters. So far, the police in India have arrested 13 people, seven from PNB and six from companies owned by Modi and Choksi.
While government officials dismissed the photo, saying the jeweler was simply a part of a non-official business delegation, and that the prime minister had only stopped to take the photo, last week Modi’s ruling Bharatiya Janata Party lost three important by-elections.
“This case could well deliver a blow to the Modi administration’s anti-corruption bonafides,” said Michael Kugelman, Asia program director at the Woodrow Wilson Center in Washington, D.C. “The government’s response will be subjected to ample scrutiny in India and beyond, not just because it has emphatically and repeatedly called for crackdowns on corruption, but because of Modi’s close ties to big business.”