The Economic Offences Wing (EOW) of the city police on Wednesday arrested Jignesh Shah and Shrikant Javdekar, for their alleged involvement in the National Spot Exchange Limited (NSEL) payment crisis case. With the fresh arrests, the number of persons held has gone up to 11. The alleged fraud is said to be of Rs5,600 crores.
Speaking on the case, additional commissioner of police, EOW, Rajvardhan Sinha said, "Javdekar, as chief finance officer was fully aware about the NSEL conspiracy. The duo was involved in the criminal conspiracy with the other accused of the NSEL that had defrauded its borrowers."
He added that it was revealed during investigation that Indian Bullion Market Association, has a large chunk of bogus clients whose addresses etc. could not be traced which leads to suspicion of inflow of black money. "Shah, who was head of Financial Technologies India Limited (FTIL), director of NSEL and member of audit committee of NSEL, had as a director approved of all the entry of borrowers into NSEL, memberships and contracts. He also represented to the government regarding the scheme of NSEL, which was nothing but a platform for running a non-banking financial company," Sinha said.
As per the EOW, it was also revealed during investigation that the defence given by Shah and Javdekar of having no knowledge of the fraud is not correct. "They were interrogated on several occasions, however, they could not satisfy the investigator as they evaded crucial replies and hence it was felt that their custodial interrogation is necessary. It was also revealed that Shah had linked the volume of transactions to the percentage of income to FTIL and this was in a way leading to wrongful gaining whereby FTIL was substantially gaining brand value in the market which had led to the launching of the exchange" said Sinha.
Of the Rs5,600 crore fraud, the EOW has managed to secure property worth Rs5,100 crore. "Certain brokerage houses have also come into our scanner as we have found out that few brokerage houses were charging 2% as warehouse receipt charges, whereas no warehouse receipt were given to the investors. Brokerage houses have also used accounts of their clients without their consent for illegal purposes. Most of the property of Shah is in shares. His bank accounts, real estate property and demat accounts have been frozen," Sinha said.