New Delhi, Shrimi Choudhary(dna): The Enforcement Directorate (ED) is launching prosecution today against 60 former management and key executives of National Spot Exchange Ltd (NSEL) along with 13 defaulters, under the Prevention of Money Laundering Act, (PMLA) in connection with the Rs 5,600 crore scam at the exchange.
The pre-meditated countrywide commodity scam had affected 13,000 retail investors across the country. The commodity exchange had been grappling with a payment crisis since suspending trade in July 2013.
According to sources, the key accused who will face prosecution are Anjani Sinha, former CEO, NSEL, Amit Mukherjee, former, VP, NSEL, Jai Bahukhandi, former associate VP, warehouse development, NSEL, Shankarlal Guru, former chairman, NSEL, among others.
It will also launch prosecution against 13 borrowers/defaulters, whose properties has been attached by the ED. This includes Mohan India and its group companies, N K Proteins, Lotus Refineries, PD Agro, Spincot Textile. ED has so far attached assets of worth Rs 1,000 crore– both movable and immovable, under PMLA in connection with NSEL scam.
“The prosecution to be launched Under Section 3 & 4 of PMLA, 2002,” a senior ED official told dna.
As per Section 3, whosoever directly or indirectly attempts to indulge or knowingly assists in any process or activity connected to proceeds of crime including its concealment, possession and acquisition, shall be guilty of money laundering.
The Section 4 says that the offence of money-laundering shall be punishable with rigorous imprisonment for a term, which shall not be less than three years but which may extend to seven years.
“We are launching prosecution against around 60 people of NSEL. This includes former management, key executives and directors of the exchange.” said ED sources.
“To prosecute a person means — to officially accuse someone of committing a crime in a law court or to try to prove that a person accused of committing a crime is guilty of that crime,” said a source.
In September 2013, ED registered a criminal case under PMLA, 2002 in the NSEL scam against exchange officials and directors of defaulting companies.
ED’s huge attachment came from N K Proteins, one of the largest defaulters, whose liabilities on the exchange stood at nan estimated over Rs 900 crore. This includes its Gujarat based castor
oil extraction plant worth Rs 278 crore, commercial property estimated Rs 14 crore and its Andhra Pradesh based rice mills worth Rs 41 crore.
The agencies have also attached assets of Mohan India worth Rs 125 crore, another big defaulter in the scam with initial liability of Rs 922 crore.
Another defaulter facing the wrath are Spincot Textile and PD Agro Processor Ltd, with attached assets worth Rs 84 crore and Rs 50 crore, respectively.
Couple of days back, the Maharashtra government formally attached a bungalow belonging to Jignesh Shah, promoter of Financial Technologies (FTIL). This includes bungalow, R Square, located in the upscale Juhu scheme area in western Mumbai.
The state government has issued a notification and taken Shah’s Juhu residence Bungalow property under its control.
“This means, the government has formally attached it. As of now, there is no development on auctioning it. Any property attached by the police for auction has to be taken over by the state first,” said Rajvardhan Sinha, additional commissioner of Mumbai Police.
“Properties are attached by the state under powers conferred by the Maharashtra Protection of Interests of Depositors Act (MPID),” said Sinha.
In December 2013, three properties of Shah – the Juhu bungalow, a row house in Aarey Colony in Goregaon, and a plot in Pune – were attached by the economic offences wing (EOW) of the Mumbai police in the scam.
According to sources, the properties of the borrowers who defaulted and those of the directors of FTIL and some officials of NSEL had earlier been attached by the EOW in December 2013. Apart from these, Shah’s shares in FTIL and in Indian Energy Exchange, and fixed deposits were attached by the EOW.
Vehicles, bank accounts, shares and investments were also attached by the EOW. The total value of the all attached properties worked out to Rs 6,200 crore.
The NSEL payment troubles started after it was ordered by the regulator Forward Markets Commission in July 2013 to suspend spot trade in most of its contracts due to suspected trading violations.
The exchange could not settle the outstanding trades, triggering investigation by the police and regulators to find out whether the exchange had defrauded traders by not enforcing rules requiring sufficient collateral to be set aside.