Tightening the noose around the over Rs5,600-crore National Spot Exchange Limited (NSEL) scam, the Enforcement Directorate on Monday registered a separate case under the stringent Prevention of Money Laundering Act. The Economic Offences Wing (EOW) of the Mumbai Police is investigating the scam and has arrested two senior NSEL officials.
According to sources, after preliminary inquiries into the scam, the ED was convinced that there is a prima facie case to probe into the financial transactions by the NSEL abroad.
After the registration of the case on Monday, the ED will examine documents and transactions related to NSEL. It will also question the officials and defaulters at NSEL.
The Mumbai Police had alleged that the suspects had cheated more than 13,000 investors by hatching a criminal conspiracy, forging documents and falsifying accounts. The police said NSEL has no warehouses where physical goods could be stored. Bogus warehouse receipts were being issued while trading was being done only on paper.
The EOW arrested NSEL vice-president and head of business development Amit Mukherjee and former assistant vice-president and head of know-your-customer department Jai Bahukhundi on October 9 and 10, respectively.
“Mukherjee had introduced new members, investors, clients and companies to the NSEL, including those firms that defaulted in payments. Mukherjee had received kickbacks from various companies, including Mohan India, one of the largest borrowers at the Exchange,” said an EOW official.
Sources said Mukherjee had allegedly taken Rs50 crore as kickbacks from Mohan India.
“The net worth of companies is inaccurate in NSEL books of accounts. The borrowers had been diverting funds to other businesses, including real estate, but neither Mukherjee nor Bahukhundi brought this to the management’s notice,” said another EOW official.
The investigators found that the borrowers didn’t have physical control of stock against which money was borrowed.
The scam first came to light when one of the investors complained to the police that he was duped. After conducting preliminary investigations into the case, the EOW registered a case on September 30.
So far, cases have been registered against 15 people, and 25 borrowing companies and trading members and brokers.