The Enforcement Directorate (ED) on Tuesday arrested founder and former chairman of Financial Technologies (India) Ltd (FTIL) Jignesh Shah in the National Spot Exchange Ltd (NSEL) commodity exchange fraud.
“Shah has been arrested for not cooperating with the investigative processes,” said a senior ED official on condition of anonymity.
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), according to ED officials.
This is the second time Shah has been arrested in connection with the NSEL fraud. He was arrested by the Economic Offences Wing of the Mumbai Police in May 2014 and granted bail by the Bombay high court three months later.
Shah will be produced before the special PMLA court on Wednesday by the ED, which filed its first chargesheet in the NSEL scam in April 2015.
In the chargesheet, the ED alleged a criminal conspiracy leading to the Rs.5,574.35 crore scam at NSEL, which was 99.99% owned by FTIL. Shah was the chairman of FTIL.
ED had also registered a criminal case against Shah under the PMLA in 2013.
In addition, ED had attached properties worth Rs.600 crore in the case. These include the properties of 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.
Hearings on the case pertaining to the ED’s chargesheet have been stuck due to technical reasons.
Last Thursday, a special court on money laundering offered some respite to the 68 accused in the NSEL scam, including Shah, who were supposed to make a personal appearance before the court. Shah was granted an exemption on medical grounds.
The crisis at NSEL came to light on 31 July 2013 when the exchange suspended trading in all but its e-series contracts. These, too, were suspended a week later.
The suspension 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.
“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,” said 63 Moons Technologies Ltd (formerly FTIL).