FTIL founder Jignesh Shah held again in NSEL money-laundering case
13 July 2016
The Enforcement Directorate on Tuesday arrested Financial Technologies India Ltd (FTIL) founder Jignesh Shah in connection with its probe into the Rs5,600-crore National Spot Exchange Limited (NSEL) money laundering scam.
Officials said Shah was arrested under the provisions of the Prevention of Money Laundering Act (PMLA). ''Shah has been arrested for not cooperating with the investigative processes,'' said a senior ED official on condition of anonymity.
The officials said Shah was questioned by the investigating officer of the case on Tuesday after which he was placed under arrest. ED will produce Jignesh Shah before a special court in connection with the anti-money-laundering case.
"Shah will be produced in a special anti-money laundering court on Wednesday," an Enforcement Directorate official said.
This is the second time Shah has been arrested in connection with the NSEL fraud. He was arrested by the Economic Offences Wing of the Mumbai Police in May 2014 and granted bail by the Bombay high court three months later.
Shah was also named in the first charge sheet filed by the Enforcement Directorate in this case last year.
"We fail to understand why such a coercive step was taken against by the Enforcement Directorate when Shah has been fully cooperating with the investigation," Financial Technologies said in a statement.
The Enforcement Directorate had, in March last year, filed a 20,000-page investigation report in a Mumbai court accusing NSEL and 67 others, explaining how NSEL funds were laundered and "illegally ploughed into purchase of private properties".
The ED, which found a money trail amounting to Rs3,721.22 crore, had registered a criminal case under the Prevention of Money Laundering Act with the Economic Offences Wing of Mumbai police in 2013.
A high-level meeting, chaired by economic affairs secretary Shaktikanta Das had, last month, also directed the Maharashtra government to expedite the resolution of the case by quickly auctioning assets worth Rs6,116 crore attached so far and refund investors at the earliest.
NSEL's payment troubles started after it was ordered by the Forward Markets Commission in July 2013 to suspend spot trade in most of its contracts due to suspected trading violations.
The exchange could not settle the outstanding trades, sparking investigations by the police and regulators to find out whether the exchange had defrauded traders by not enforcing rules requiring sufficient collateral to be set aside.
Financial Technologies India blamed NSEL executives and the trading parties for the default. There were 24 members who defaulted payment to about 13,000 investors.
The government in a fiat merged scam-hit National Spot Exchange Limited (NSEL) with its publicly-listed parent, FTIL, ''completely undermining and disregarding the interest of 63,000 shareholders of FTIL. Financial Technologies India Ltd (FTIL) had challenged the executive order, but in vain. (See: Forced amalgamation of NSEL against shareholders' interest: FTIL)