Mumbai: A special money laundering court sent Jignesh Shah, founder and former chairman of Financial Technologies (India) Ltd (FTIL), to five days in police custody on Wednesday in connection with the fraud at the National Spot Exchange Ltd (NSEL) commodity exchange.
Shah will remain in Enforcement Directorate’s (ED) custody till 18 July, when the matter would be heard next.
The ED, which had launched a money laundering probe into the NSEL scam, arrested Shah late on Tuesday evening for allegedly not cooperating with investigations.
ED, a specialized financial investigation agency under the ministry of finance, has found evidence of money laundering against Shah under the Prevention of Money Laundering Act, 2002 (PMLA), ED officials said.
This is the second time Shah has been arrested in connection with the NSEL scam. He had been arrested by the Economic Offences Wing of the Mumbai Police in May 2014 and was granted bail by the Mumbai high court three months later.
Shah was produced before the special PMLA court on Wednesday by ED, which filed its first chargesheet in the NSEL scam in April 2015.
In the chargesheet, ED alleged a criminal conspiracy leading to the Rs.5,574.35 crore scam at NSEL, 99.99% owned by FTIL. Shah was the chairman of FTIL. ED had registered a criminal case against Shah under PMLA in 2013.
In court on Wednesday, the investigative agency submitted evidence of a money trail between FTIL and its three units: NSEL, National Bulk Handling Corp. (NBHC) and the Indian Bullion Market Association.
Two instances of fund transfer to the tune of Rs.200 crore and Rs.62.9 crore were found between FTIL and NBHC just days before the settlement crisis hit NSEL. Trading on the exchange was halted on 31 July, which eventually led to a settlement crisis of Rs.5,574 crore.
A transfer of Rs.74.25 crore was also detected between FTIL and NBHC. Funds transfers of Rs.30 crore were also found between defaulters and FTIL subsidiaries.
ED had earlier attached properties worth Rs.600 crore belonging to defaulters such as N.K. Proteins, PD Agro Processors and Mohan India. In June, the review group of the department of economic affairs had asked the ED to start auctioning the attached properties.
However, hearings on the case pertaining to the ED’s chargesheet have been stuck due to technical reasons. Last Thursday, the special court on money laundering offered some respite to the 68 accused in the NSEL scam who were supposed to make a personal appearance before the court. Shah was granted an exemption on medical grounds.
In response to the ED’s arrest of Shah, 63 Moons Technologies Ltd (formerly FTIL), said the step is not justified.
“We fail to understand why such a coercive step has been taken by the Enforcement Directorate when Shah has been fully cooperating with the investigation and has been going every time he has been called, including today, especially when ED’s own complaint has failed to establish any money trail to either Shah or 63 moons. We have full faith in Indian judiciary and sincerely believe that truth will prevail,” the company said in a statement on Tuesday night.