Jignesh Shah to blame for NSEL scam, says arrested chief executive’s affidavit
Anjani Sinha’s letter is an apparant attempt to pressure the EOW to act against the company’s top brass.
An affidavit written by arrested former NSEL CEO Anjani Sinha laying the blame for the NSEL scam squarely on the exchange’s promoter Jignesh Shah has been circulated among investors who lost money in the scandal, in an apparent attempt by Sinha to pressure Mumbai Police EOW to act against the top honchos of the company.
Sinha has alleged that far from what Shah claims, the promoter took most of the important decisions at NSEL and wanted absolute control over the Exchange in all matters. He says NSEL earned the bulk of revenues for Shah’s FTIL group and Shah was keen to shore up its business to offset the losses incurred by other international ventures floated by the group. However, Shah was also aware that he was exposing his buyers to huge commoditybased risks but was of the belief that the buyers were from a good industrial background and would settle their dues to protect their reputation.
In the affidavit, Sinha had also offered to assist the EOW to uncover the wrong doings at NSEL if he was given bail instead of being sent to judicial custody. The statement describes in detail the growth of NSEL and its downfall. Sinha, in the affidavit, also repents that he failed to act as a whistle blower.
Sinha has alleged that Jigesh Shah ordered the NSEL top brass to froth up agricultural commodities volumes through the Indian Bullion Market Association (IBMA) and that he would settle the profit or loss which IBMA may incur. In one instance, when IBMA incurred a loss of Rs 1.5 crore through `market making’, Shah convinced MCX to reimburse the loss through fictitious entries. MCX also paid NSEL by cheque for a fake consultancy/market research report, the affidavit alleges.
In another case of Ritika Comtrade, whose promoters incurred a loss in gold trading through IBMA in 2011, Jignesh Shah allegedly took positions in MCX on behalf of Ritika and earned profits to square off the account, Sinha has alleged.
Sinha even suggests that an enqury be conducted into Shah’s international exchanges to check for circular trading by a handful of brokers and also for FEMA violations.
During the course of NSEL’s operations, the parent company FTIL, in which Shah, his family and associates held a stake of over 40 per cent, earned more than what it had invested by way of one time software fee, yearly software maintenance fee and a special dividend paid by NSEL to its promoters, says the affidavit.
The EOW investigation into the NSEL scam has reportedly lost steam in the past few months leaving NSEL investors restless. Is is believed that Sinha’s affidavit, which he had submitted to the EOW at the time of his arrest in October, has been leaked deliberately to investors to generate opinion that the EOW was not acting against NSEL promoter Jignesh Shah, although Sinha had provided the agency sufficient leads on Shah’s role.
Some of these investors who received this affidavit, have been posting it on twitter and other social platforms this week, asking why EOW was going slow on its investigations. Mumbai Police EOW has, however, denied that it was going slow; saying that forensic audit of NSEL and evidence gathering was being done before initiating any action.
Advocate Mohan Tekawade, who represented Anjani Sinha at the time of his arrest, also refused to comment on why the affidavit had reached investors now.
An affidavit written by arrested former NSEL CEO Anjani Sinha laying the blame for the NSEL scam squarely on the exchange’s promoter Jignesh Shah has been circulated among investors who lost money in the scandal, in an apparent attempt by Sinha to pressure Mumbai Police EOW to act against the top honchos of the company.
Sinha has alleged that far from what Shah claims, the promoter took most of the important decisions at NSEL and wanted absolute control over the Exchange in all matters. He says NSEL earned the bulk of revenues for Shah’s FTIL group and Shah was keen to shore up its business to offset the losses incurred by other international ventures floated by the group. However, Shah was also aware that he was exposing his buyers to huge commoditybased risks but was of the belief that the buyers were from a good industrial background and would settle their dues to protect their reputation.
Shah, says Sinha, “was of the opinion that the entire matter is civil in nature” and “did not anticipate police action of such magnitude, otherwise he would have revisited his decision.”
In the affidavit, Sinha had also offered to assist the EOW to uncover the wrong doings at NSEL if he was given bail instead of being sent to judicial custody. The statement describes in detail the growth of NSEL and its downfall. Sinha, in the affidavit, also repents that he failed to act as a whistle blower.
Sinha has alleged that Jigesh Shah ordered the NSEL top brass to froth up agricultural commodities volumes through the Indian Bullion Market Association (IBMA) and that he would settle the profit or loss which IBMA may incur. In one instance, when IBMA incurred a loss of Rs 1.5 crore through `market making’, Shah convinced MCX to reimburse the loss through fictitious entries. MCX also paid NSEL by cheque for a fake consultancy/market research report, the affidavit alleges.
In another case of Ritika Comtrade, whose promoters incurred a loss in gold trading through IBMA in 2011, Jignesh Shah allegedly took positions in MCX on behalf of Ritika and earned profits to square off the account, Sinha has alleged.
Sinha even suggests that an enqury be conducted into Shah’s international exchanges to check for circular trading by a handful of brokers and also for FEMA violations.
During the course of NSEL’s operations, the parent company FTIL, in which Shah, his family and associates held a stake of over 40 per cent, earned more than what it had invested by way of one time software fee, yearly software maintenance fee and a special dividend paid by NSEL to its promoters, says the affidavit.
The EOW investigation into the NSEL scam has reportedly lost steam in the past few months leaving NSEL investors restless. Is is believed that Sinha’s affidavit, which he had submitted to the EOW at the time of his arrest in October, has been leaked deliberately to investors to generate opinion that the EOW was not acting against NSEL promoter Jignesh Shah, although Sinha had provided the agency sufficient leads on Shah’s role.
Some of these investors who received this affidavit, have been posting it on twitter and other social platforms this week, asking why EOW was going slow on its investigations. Mumbai Police EOW has, however, denied that it was going slow; saying that forensic audit of NSEL and evidence gathering was being done before initiating any action.
Advocate Mohan Tekawade, who represented Anjani Sinha at the time of his arrest, also refused to comment on why the affidavit had reached investors now.
