NSEL case: EOW finds `100 cr hawala deals
The economic offences wing has informed the enforcement directorate about the money flow to Dubai
Mumbai: The economic offences wing (EOW) of Mumbai Police on Thursday said at least ₹ 100 crore had been transferred to Dubai through hawala transactions in connection with the ₹ 5,574.35 crore payment crisis at the National Spot Exchange Ltd (NSEL).
The term “hawala" refers to a process of transferring money without any actual movement of money taking place.
The agency has informed the enforcement directorate, which investigates foreign exchange violations, about the money flow in the NSEL case.
“We have found huge cash withdrawals which point at hawala transactions," Rajvardhan Sinha, additional commissioner of EOW, said. He refused to divulge details of the entities involved in these transactions.
A forensic audit team of EOW has been at the offices of Anand Rathi Commodities Ltd, the commodity-business arm of brokerage firm Anand Rathi Financial Services Ltd, for the past two days, verifying its book of accounts and several other documents submitted by the firm in connection with the NSEL crisis, Sinha said.
A spokesman for Anand Rathi Financial Services did not confirm or deny the development.
“… We have provided all the necessary information as and when desired by various authorities," the spokesman said in an email. “We have and will always extend complete co-operation and assistance to the regulator in their investigation putting all our efforts and diligence to get our clients’ money recovered."
Investors whose money is trapped in the NSEL crisis called for further action by authorities.
“We always suspected this and this should be probed further to find out the culprits. Most of the borrowers are shell companies and were purposely used to launder money abroad or locally," said Ketan Shah, an investor.
EOW on Thursday again summoned Jignesh Shah, chairman of NSEL’s promoter Financial Technologies (India) Ltd, in the case.
The agency has appointed special public prosecutor Avinash Avhad to represent EOW in court in the NSEL case.
The settlement crisis at NSEL came to light on 31 July when the exchange abruptly suspended trading in all but its e-series contracts. These were suspended a week later. The closure of trading may have been prompted by an instruction from the ministry of consumer affairs to the exchange asking it not to offer futures contracts. A spot exchange isn’t supposed to do so, but NSEL was doing that.
NSEL tried to implement the change, but because its appeal was to investors and members who were not interested in spot trades, it eventually had to suspend all trading.
All trading on NSEL, it later emerged, happened in paired contracts, with investors, through brokers, buying a spot contract and selling a futures one for the same commodity. They pocketed the difference—around 18%.
The entities selling on spot and buying futures were planters or processors and members of the exchange. It turned out there were only 24 of them, and they used the paired contracts as a way to raise easy money. When the trading was suspended, the investors were left holding contracts that the members couldn’t buy because they didn’t have the money to do so.
On 14 August, NSEL proposed a payout plan, but it has been unable to stick to the schedule.
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