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Mumbai: An alleged hawala operator and key suspect in the Jharkhand money laundering scam dating back five years owns a stake in an entity controlled by the National Spot Exchange Ltd (NSEL)—a revelation that raises more questions over the credibility of the crisis-hit commodities exchange.

Manoj B. Punamiya, an associate of former Jharkhand chief minister and alleged mastermind of the scam Madhu Koda, has a 1.05% stake in Indian Bullion Market Association Ltd (IBMA), of which NSEL owns 60.88%, according to Registrar of Companies (RoC) documents seen by Mint. He was one of the 11 people who held a more than 1% stake in the company, apart from NSEL, as of the year ended March 2012.

Some NSEL directors also sit on the board of IBMA, a consortium of leading bullion dealers and jewellery merchants. An NSEL spokesman confirmed that Punamiya has been a shareholder of IBMA since 2009.

The revelation comes at a time when the commodities spot exchange is the midst of a crisis, having to settle 5,572 crore with 148 members and brokers who represent 13,000 investors.

On 31 July, NSEL abruptly stopped trading in all one-day contracts without assigning a clear reason for doing so, triggering the payments crisis. The exchange has fallen short of promised payouts three times in a row after unveiling a staggered settlement schedule on 14 August.

A special team headed by economic affairs secretary Arvind Mayaram is investigating the payment crisis and expected to submit its report on 12 September.

The shareholding list of IBMA with RoC states that Punamiya holds 152,764 shares in IBMA.

The NSEL spokesman said IBMA was incorporated on 15 June 2007 and Punamiya became a shareholder from 2 July 2009.

The Enforcement Directorate (ED), which investigates foreign exchange violations, confirmed that Punamiya, who owns the stake in IBMA, is the same person whose assets have been frozen by the agency in connection with the Jharkhand scam.

In 2009, Koda was arrested for allegedly siphoning off millions of dollars to buy mines in Africa and properties across Asia when he held the mining portfolio in the Jharkhand government. Koda has been charged with siphoning off funds, illegal investments and money laundering, estimated at anywhere between 2,000 crore and 4,000 crore by media counts. He was released on bail in August after having been in jail since 30 November 2009.

When asked whether NSEL was aware of Punamiya facing money laundering charges, the NSEL spokesman responded, “He is a shareholder. Beyond that NSEL is not aware of his matters, including alleged proceedings."

Punamiya’s Zaveri Bazaar address in south Mumbai mentioned in the shareholding list of IBMA is the registered address of Balaji Bullions and Commodities (India) Pvt. Ltd, one of the few companies owned by him, which has been under the scanner of income-tax authorities, the Central Bureau of Investigation and ED since 2009.

Phone calls made to Punamiya’s office were answered by a person who identified himself as Mukesh Kumar Jain and claimed to be his cousin. Jain said Punamiya was travelling and unavailable for comment. He refused to provide Punamiya’s mobile phone number, but said he would arrange a call with Punamiya.

Until press time on Thursday, Mint had not received a call from either Jain or Punamiya.

According to the ED chargesheet in the Jharkhand scam, Punamiya through his “associate companies had entered into large number of financial transaction in projecting the ill-gotten money as genuine and played a major role in investment of ill-gotten money to the extent of 58.69 crore".

Punamiya, who is currently out on bail, is facing an ED prosecution in a Jharkhand court for his role in the scam.

“The ED investigation in Koda case is still going on in India and in other countries, such as, Dubai, Thailand, Indonesia and Liberia... Therefore, possibilities of filing further complaint against the petitioner (Punamiya) cannot be ruled out as there is every possibility of fresh evidence being collected in course of ongoing investigation," said a submission made by ED in a Jharkhand court last year.

When asked whether the fact that he was a stakeholder in IBMA had been reported to the Financial Intelligence Unit (FIU) of the finance ministry, given the fact that Punamiya had been accused of money laundering, the NSEL spokesman said Punamiya had made no transactions with or through IBMA/NSEL, so there was no report to FIU.

The Forward Markets Commission (FMC), the commodity market regulator that is overseeing NSEL’s settlement process, has said that since IBMA is connected to NSEL, the exchange has to submit to the regulator the details of shareholding and directors of IBMA, all trading members/clients attached or connected to IBMA; and the date-wise details of pay-in and pay-out obligation from 15 July 2013 with respect to all trading members connected to IBMA. FMC also said no payment can be made to IBMA without the regulator’s prior approval.

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