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Mumbai: The economic offences wing (EOW) of the Mumbai police on Wednesday said it has frozen all personal accounts and lockers of Jignesh Shah, Joseph Massey and Anjani Sinha in connection with the 5,574.35 crore payment crisis at the National Spot Exchange Ltd (NSEL)—a move that indicates the investigation is getting closer to Shah, who has tried to distance himself from events at the exchange.

Shah is chairman and managing director of Financial Technologies (India) Ltd, the promoter of NSEL, Massey is former CEO and managing director of MCX Stock Exchange Ltd, a group company, and Sinha is former CEO and managing director of NSEL.

“We have frozen the accounts and are examining whether the money lying in these are from proceeds of crime," said Balsing Rajput, deputy commissioner of police (EOW).

Rajput said that one of the 24 borrowers of NSEL, NCS Sugars Ltd, has given an undertaking that it will settle its payment obligations.

However, Ark Imports Pvt. Ltd, Mohan India Pvt. Ltd and Yathuri Associates—three of the top six borrowers of NSEL have till now not appeared before EOW despite the summons, said Rajput.

“If they don’t come, we will move against them," he added.

The top six borrowers account for around 70% of the total amount outstanding to NSEL.

An email sent to NSEL did not receive a response.

On Wednesday, Mohan India agreed to pay 771 crore to NSEL towards its payment obligations.

The commodity spot exchange in a press statement said Mohan India will pay 11 crore now and the balance over the next year.

“The relentless efforts put in by the new team at NSEL along with the NSEL Investors’ Forum (NIF) over the last few weeks are expected to show some positive results in terms of recovery of monies from the members," said Saji Cherian, managing director and chief executive, NSEL.

“Some of the big members who have pay-in obligations are cooperating with NSEL and the various NIF teams. This is a positive development in the recovery process post the payment crisis," Cherian added.

Despite Mohan India’s agreement with NSEL, however, it is unlikely that it will be removed from the scope of EOW investigations, according to Rajput.

“It is a settlement between two accused. Let them (Mohan India) pay the money to the investors. We will still probe the intentions of the borrowers and move against them," said Rajput.

Meanwhile, the investigating agency on Wednesday questioned the directors of P.D. Agro Processors Pvt. Ltd and Lotus Refineries Pvt. Ltd.

Karnal-based P.D. Agro Processors has an outstanding debt of 639.55 crore while Lotus Refineries Ltd owes 252 crore to NSEL. Lotus Refineries has so far given only 8 lakh to the commodity spot exchange.

“We have deployed a six-member team of NSEL at EOW. The team is helping us resolve the payment dispute between the borrowers and the commodity spot exchange," said Rajput.

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.

EOW on Wednesday said it will appeal for extending the custody of Anjani Sinha and Nilesh Patel, managing director of N.K. Proteins Ltd, when the case comes up for hearing in the magistrates’ court on Thursday. Both Sinha and Patel have been arrested by EOW in connection with the NSEL payment crisis.

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