The Economic Offences Wing (EOW) of the Mumbai Police, which is investigating the Rs 5,600 crore settlement crisis at the National Spot Exchange Ltd (NSEL), has said the NSEL management misrepresented facts to commodity market regulator Forward Markets Commission.
NSEL’s chief financial officer Shashidhar Kotian was also questioned by the EOW for several hours on Friday. EOW sources said that while they have appointed a forensic auditor of their own, they also obtained the copy of the audit report by Grant Thornton India for the Forward Markets Commission, in order to gain insights into the case.
In a section titled ‘Misrepresentation of facts’, the report stated, “When the FMC asked the NSEL if it was aware of any wrongdoings, the NSEL said that it was not. The audit finds that the NSEL misrepresented the fact to the FMC.”
The EOW interrogated Kotian on the inconsistencies observed in NSEL’s balance sheet. “Kotian has claimed that the NSEL uses a software that automatically assumes that investments are squared off with deposit of goods of corresponding value, and that the entries were made by the software. We have let Kotian go for now but are consulting experts to confirm if this is indeed possible,” said an EOW official.
Earlier, the EOW, while going through the NSEL’s balance sheets, allegedly found that there were several entries made on August 8 and August 9 to show that investments were being backed up with commodities in warehouses.
The officer said that a large number of such entries were made within the period of these two days, as attention had started increasing about the NSEL’s activities.
A senior EOW official said that more such fraudulent entries were found in the balance sheet. “NSEL was a ponzi scheme under the garb of an exchange. The money kept rolling because new investors were coming on board,” said the official.
FTIL board gets FMC ex-chief, retired judge
New Delhi: Financial Technologies India Ltd has appointed former FMC chairman Venkat Chary and retired judge R J Kochar as additional directors on its board, after a series of resignations of top officials in the aftermath of the Rs 5,600 crore payment crisis at its group firm NSEL.
So far, five directors — CM Maniar, N Balasubramanian, R Devarajan, PR Barpande and T C Nair have quit FTIL. Their resignation came amid payment crisis to the tune of Rs 5,600 crore in FTIL-promoted National Spot Exchange Ltd (NSEL). pti