Home / Companies / NSEL fraud: Seven executives arrested

The economic offences wing (EOW) of the Mumbai Police on Monday arrested seven executives of the defaulting borrowers of the National Spot Exchange Ltd (NSEL) which is engulfed in a 5,574.35 crore fraud.

The agency has arrested Kailash Aggarwal, director of Ark Imports Pvt. Ltd; Narayanam Nageswara Rao, managing director of NCS Sugars Ltd; Varun Gupta and Chandra Mohan Singhal, directors of Vimladevi Agrotech Ltd; Ghanta K. Rao, managing director of Spin-Cot Textiles Pvt. Ltd, Prashant Boorugu, managing director of Metkore Alloys and Industries Ltd and B.V.H. Prasad of Juggernaut Projects Ltd, an EOW official said.

“After sustained interrogation early this morning, the investigating officials felt that it will be necessary to have custodial interrogation because these companies were not co-operating," said Rajvardhan Sinha, additional commissioner of police (EOW).

Aggarwal’s Ark Imports, one of the top defaulters owing 719.37 crore to NSEL, is among the top wool traders in India.

Other borrowers who have defaulted at NSEL like Juggernaut Projects, NCS Sugars, Vimladevi Agrotech, Spin-Cot Textiles and Metkore Alloys owe 226 crore, 53.70 crore, 13.94 crore, 38.26 crore and 95.08 crore respectively to NSEL.

This is not the first time EOW has arrested the defaulting borrowers. So far, it has arrested key executives of at least six defaulting borrowers including NK Proteins Ltd, PD Agroprocessors Pvt. Ltd, Swastik Overseas Corp. and Namdhari Group among others. Most of the executives are currently out on bail.

“We are happy that most of the borrowers have been arrested. Now we expect top brokers, auditors involved in the NSEL fraud and some top executives of FTIL to be put behind bars," said Ketan Shah, founder of NSEL Investors’ Action Group.

On 31 July last year, what was then believed to be a settlement crisis at NSEL came to light when the exchange suspended trading in all but its e-series contracts. These too were suspended a week later.

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.

It later emerged that all trading on NSEL happened in paired contracts, with investors, through brokers, buying a spot contract and selling a futures one for the same commodity.

On 14 August last year, NSEL proposed a payout plan, but it has been unable to stick to the schedule.

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