Mumbai: On a January morning in 2013, there was a sudden wave of panic in the offices of Winsome group. The word was out that the Income Tax department was about to carry out a massive raid. It was a time when Winsome was one of the top diamond houses in India and there was no sign of the gathering storm that would shake the group three months later. On that day, as the fear of an imminent raid spread, a handful of staff members were told to carry out a strange order.Within hours, they changed all the hard disks of the office computers. Days passed but the raid never happened. By the time the staff sensed that it was just a hoax, crucial records of Winsome’s dealings had disappeared.In March that year, Winsome defaulted as banks pulled the trigger — an event that rattled Mumbai’s diamond district.It’s one of the stories that several former employees of Winsome have told the Central Bureau of investigation (CBI) in the past few months. They don’t know whether it was a ploy to destroy records before the defaults or just a coincidence.But, according to them, the absence of old records — which vanished along with the hard disks — was the main reason why they could never come up with any evidence against Jatin Mehta. Mehta could not be reached on Thursday despite repeated attempts.CBI had turned the heat on Winsome amid a perception that if the central agencies were quick enough to act against Mehta, the Nirav Modi scam could have probably been averted.In their recent statements to CBI, several senior employees, former directors, and executives responsible for finance and operations were almost unanimous that Jatin Mehta was the ultimate decision maker, even though he had officially distanced himself from the company well before the defaults. According to them, other officials, irrespective of their designations, simply followed Mehta’s directions. However, none of them could substantiate that Mehta was directly responsible for the losses caused to banks.Mehta, now a citizen of the Caribbean island St. Kitts (which has no extradition treaty with India), had resigned as managing director in April 2011 and stepped down from the boards of Winsome and group company Forever. He left India to become the head of Winsome’s Dubai subsidiary, saying he would love to explore opportunities abroad.With multiple agencies probing Winsome, Mehta is not known to have visited India after the defaults — not even when his mother passed away.PLAYING WITH BANK MONEY?In discussing the operations of Winsome, at least one of the former employees have told CBI how they suspected the Dubai office could have played around with bank funds to carry out financial speculations and cut arbitrage deals. They said non-fund lines from banks in the form of stand by letter of credit (SBLC) — which, like the letter of undertakings (LoUs) issued by PNB to Nirav Modi — were guarantees. Against these SBLCs, Winsome imported gold to make 24 carat pendants, bangles, and medallion. None of these were ‘jewelleries’ and took only a few weeks to make against the 270-day credit offered by banks giving SBLCs. These products which were quasi-gold were exported to Dubai. “Since these were in form of medallion, it was as good as gold, and therefore, ready cash. We suspected, even though we could never prove, that Dubai parties, which were probably fronts of Jatinbhai, sold these to generate funds and bet on currencies and commodities during the 270-day SBLC period,” a former official told ET. This, said the person requesting anonymity, was also a way to overcome trading restrictions on forex forward contracts in India where bank sold derivatives only if there was an underlying actual trade. In Dubai there were no such curbs.THE DEFAULTS In the summer of 2013, 13 banks, led by British lender Standard Chartered sensed that the music has stopped. Their total exposure was `6,800 crore (more than the principal amount Indian banks’ had lent to Mallya’s Kingfisher). SBLC, which were introduced by RBI to encourage jewellery exports, is at the heart of the Winsome saga.The SBLCs (like LoUs) were issued by Indian banks in favour of international bullion banks which supplied gold to Winsome and Forever. The two companies used the bullion to make gold items which were exported to 13 UAE clients. Banks never bought the story while Mehta claimed he was a victim of a conspiracy led by StanChart.Even as CBI goes after bankers, it is unclear whether it has found the links to money trail and clues to the unanswered questions: what are the true identities of the UAE clients? Are they fronts of Mehta? And, most importantly, who were the counter-parties who cut billion dollar derivative trades with these small firms?