Bad Boy Billionaires: India

He's carved out a global empire,

and today, we have as our guest, jeweler extraordinaire, Nirav Modi.

Nirav, whoever we've interviewed,

we've been very particular - they have to have...

they have to be totally honest,

they have to have good ethics and morality in their business dealings.

- I mean, your reputation precedes you. - Thank you.

So, our, our...

To be a jeweler, it's all about having trust, right?

Because when a person is spending lakhs and crores on jewelry, it's about...

The brand has to embody trust.

Luxury had just happened to India.

No longer were we only looking at the Guccis and the Pradas.

Today, we were looking at Indian brands, and Nirav Modi was that brand.

It seemed like this beautiful, aesthetic fantasy.

He really had this vision for, like, a multinational jewelry brand,

something like Tiffany's.

He was bold, he was taking risks.

It felt like he had all the right pieces in this puzzle.

It's very hard to make that much noise

without obscene amounts of money behind you.

He did everything right.

You could never have expected things to ever go wrong.

It was this strange unending fountain of money

that he seemed to have always.

Where was it coming from?

It was very difficult for anyone to know or suspect that something was wrong

until it all actually came tumbling out.

This is the biggest corporate fraud that has taken place in India.

Big hunt for India's biggest thief, Nirav Modi, is hotting up.

Nirav Modi came out of nowhere,

created this beautiful image,

had a beautiful product,

he controlled his narrative, he controlled his whole story,

and then... he was gone.

The world of fashion and the world of luxury,

it loves a good story,

but it also loves to be bedazzled and to be beguiled.

Nirav Modi first came across my radar

at a time when he was beginning to really make himself known in the West.

He had come out of India very, very quickly,

he opened up jewelry stores in New York, then in London.

He had a big launch when he opened the store in Old Bond Street.

He had hired Rosie Huntington-Whiteley, who was a top fashion model,

as the face of his brand.

The jewelry is just so elegant.

It's timeless, but contemporary, and that is certainly what I look for.

And I think at that point, it was so bedazzling

that very few people seemed to have actually stopped and asked,

"Hold on a second. Who is this guy?"

My grandfather and my father were diamantaires.

I'm a third generation diamantaire.

He arrived with this very well-crafted story.

My mother was an interior designer

and I've been surrounded by diamonds and art from a very young age.

And that story had obviously been well polished by various PR people.

We wanted to create...

India's first luxury brand.

And the more one looked at this, the more interesting it became really,

because, how had he managed to establish himself quite so quickly

and quite so conspicuously,

as a figure in the world diamond scene?

Nirav Modi came from

a very traditional Gujarati family of jewelers.

His father was a jeweler and his uncle was a jeweler.

It's a very tight-knit community, very closed off to the outside world.

It operates on honor and trust.

And their main industry

has been the cutting and polishing and processing of rough diamonds.

Throughout the world, Surat is known as the Diamond City.

The rough diamonds that are mined...

in Africa, Russia, Australia...

are polished here in Surat's factories.

There are approximately one million people associated with the diamond industry here.

Almost 90% of the world's diamonds are polished in Surat

and the polished diamonds are then exported

all over the world from here.

It is an intensely clannish industry.

Uh, it would work on trust, kinship networks, family networks...

...and that's how Nirav Modi came to enter the diamond industry.

He really apprenticed with his uncle.

That was his big first introduction into the jewelry business as a professional.

These may just look like pieces of glass or even plastic to you,

but they are actually not, are they Mr. Choksi?

No, they are absolutely,

they are a very high quality of diamonds, in fact.

I give a lot of credit to... to my uncle.

He's very kind, he's very kind, and he has been a great inspiration.

I worked for him for ten years and I learned everything from him.

We do about $80... $70, $80 million of rough that we source from...

The Gujarati jewelry business is largely very discreet,

very quiet -

Mehul Choksi was not like that.

Mehul Choksi wore the finest suits and owned a yacht,

and, uh, listed his business, Gitanjali Gems, on the stock exchange.

Mehul had a very dodgy reputation and left a lot of, uh, unpaid bills.

There were lots of court cases against him.

Then, of course, there were rumors of,

you know, him not paying people for the work they did for him...

the models - one of them who I know -

who he didn't pay her fee, but he paid her in diamonds,

and then, she later found out that they were not real.

So, Mehul, um, was hugely unpopular.

In this industry, you get to know what a person is like

from the way they talk and the way they pay.

So, when I realized he wasn't good with payments

and wasn't behaving properly,

I completely stopped doing business with him.

Some continued, I'm not saying no one did business with him,

but, I guess, there are all types.

Nirav had, sort of, learned the trade from him

and had subsequently built on his sense of what that trade ought to be.

I think Mehul had similar ambitions to Nirav Modi

and so, they were bound by that kind of vision for their companies

and maybe also the ways in which that vision could be achieved.

In 1999, Nirav Modi split away from his uncle

and he started Firestar Diamond.

Nirav Modi felt he could probably achieve

a similar scale of success like his uncle -

essentially, diamond cutting and diamond polishing,

and making jewelry for other people.

Nirav Modi's factory employed about 1,800 to 2,000 people.

It was a jewelry factory.

And the way Nirav worked was he would pay people with cash.

He would buy stock with cash and give people advance cash payments.

As a business person starting a new business,

if they are behaving responsibly and they are paying people properly...

this is how Nirav was able to create a unique image for himself.

I went to Firestar to be trained...

in 2007 in Nirav Modi's factory.

That was my first job.

The conditions there were unlike anywhere else -

there was a creche, subsidized restaurant, a doctor was provided.

Nirav Modi did a lot for the poor.

He talked to everyone,

he had no arrogance about being a big factory owner.

He talked to his employees.

Nirav Modi was like a God to us.

Nirav sir is the "Diamond King".

The polishing of diamonds is essentially labor intensive

and it's low end, it's low margin.

You need to polish a lot of diamonds

to make the kind of profit that you would want.

The setting and the selling and the retail of diamonds and jewelry at a high-end,

that is a high-margin business, that's where the real profits lie.

And that is, essentially, what tipped the scales

for Nirav to go after.

Modi realized that, "What I'm doing is no different

to what 20 other jewelers are doing

and the chance for me to create a mark in my industry

is by doing something that no other Indian jeweler had done."

Which is, essentially, building a luxury brand.

- -

Sometime around 2010,

Nirav started, uh, researching, uh, catalogues -

Sotheby's, Christie's -

in Hong Kong and Asian markets...

getting really deep into what made

the covers of those auction houses' catalogues.

He started studying how pieces were sold,

he started getting a very strong sense of the kinds of jewelry that people bought

and that went for the highest auction prices.

- Sold! -

He decides he wants to make a big splash

and he designs this beautiful necklace, uh, filled with diamonds

from the fabled Golconda mines in South India.

When you started off, which was the first milestone

that you felt that this was going to take you to the next level?

Was it... was it in Hong Kong?

- With the Golconda piece? - Yes.

Golconda, essentially, represents, the best of the best in terms of diamonds.

Some of the finest, biggest, best diamonds in the world have come from Golconda.

It's the Rolls Royce of diamonds, if you will.

One of the greatest coups in his career

was setting this Golconda diamond.

The diamond necklace set in what was known as "the lotus design".

Christie's heard about this necklace and it was like,

"You know, we hear about this necklace, but we don't know who this person is."

They called up and said, you know, "Can you show us this necklace?"

They just saw the layout, the design,

and...

they loved it.

The Golconda necklace

featured on the cover of a Christie's auction catalogue.

He was the first ever Indian jeweler to feature on the cover.

It sold for more than $3 million.

And, of course, that catapulted him into even greater recognition.

Who bought it?

It was bought by as Taiwanese, uh, industrialist.

Really? Who would have thought?

A Taiwanese industrialist? For his wife?

- Yes, of course. - Well, we hope his wife.

We hope for his wife. You never know today.

I'm a jeweler, a fine jeweler, um,

manufacturing mostly one-of-a-kind pieces

both for the industry and for a private clientele.