NSEL fraud: Peons, guards were directors at defaulting firms

Business

oi-Staff

By Super

Published: Wednesday, October 9, 2013, 9:57 [IST]

Mumbai: At least two of the 27 companies that defaulted in making payments to the beleaguered National Spot Exchange (NSEL) were found to have appointed peons and security guards as "dummy" directors, said an official involved in the probe into Rs 5,600-crore fraud at the bourse.

This was revealed when the directors of defaulting companies began turning up at the Economic Offences Wing (EOW) office of Mumbai Police after summonses were issued to them for questioning in the scam.

"We have issued summonses to over 70 people, including directors of NSEL and defaulting companies. Five to six people of two defaulting companies, who showed up today, claimed they were actually peons and security guards. They had no idea about the functioning of their firms and had nothing to do with the fraud," an EOW official said.

Without disclosing the names of these companies, he added, "These dummy directors claimed they had signed on various documents as per the instructions of their bosses."

In a related development, NSEL Directors Jignesh Shah, Joseph Massey, Shreekant Javalgekar and Dewang Neralla today appeared before the EOW officials in response to the summonses served to them. However, investigators did not record their statements.

"We are in the midst of examining the voluminous documents and other evidence we have gathered so far. Once we study the evidence, we would be in a better position to grill them (NSEL Directors) on various issues. Hence, we did not record their statement and allowed them to go. We would give them a fresh date for appearance," the officer added.

An FIR was filed on last Monday by EOW against Shah, Massey, other promoters, directors and defaulters charging them with cheating, forgery, breach of trust and criminal conspiracy, among others, in connection with the payment crisis at NSEL, promoted by Shah-led Financial Technologies.

During nearly a week-long nationwide raids, EOW officials had discovered that nine of the 27 companies, that defaulted in making payments to NSEL, did not exist at their given addresses. The EOW officials yesterday wrote to the Registrar of the Companies about the irregularities at NSEL.

The spot commodity bourse has been facing problems in settling Rs 5,600 crore dues of 148 members/brokers, representing 13,000 investor-clients, after it suspended trade on July 31 on Government's direction.

The EOW so far has frozen 64 bank accounts, including those of the troubled exchange and the accused, even as CBI has started a separate probe into alleged duping of customers and irregularities at the exchange.

PTI