Raids conducted by the Economic Offences Wing (EOW) have reconfirmed that the trades done on the National Spot Exchange (NSEL) were not adequately backed by commodities and that the warehouse receipts were fake in many cases.
According to a senior official of EOW, the search team of the Mumbai Police wing raided around 60 warehouses across the country and found that four were bogus and another 30 were completely empty. This is expected to put further pressure on the settlement process that has already seen NSEL defaulting for seven consecutive weeks.
Meanwhile, the EOW has issued summons to all the entities named in its first information report (FIR), including Jignesh Shah, to present themselves before the police to record their statements. The police have named all the promoters and directors of Financial Technologies (India) and NSEL, along with the defaulting entities, in the FIR.
“Summons have been issued to everyone under Section 160 of CrPC (Code Of Criminal Procedure)... We have not done any questioning as yet... now if they do not appear on the day of summon, we will declare them as absconding,” said the official, adding that arrests would be made only if any of the entities do not cooperate with the process or if there is any “strategic advantage” in
the arrests. The EoW will ascertain details related to the assets — including bank accounts, income tax statements and passport — of all the entities while recording their statements. A procedural lookout notice has also been issued against the persons named in the FIR.
Last week, various search teams of the EOW conducted raids across 16 states in 53 cities and 184 locations. The raids were conducted at the offices of NSEL and also on the warehouses and residences of the 24 entities that have defaulted on their outstanding payments to the exchange. The police has also frozen a total of 58 bank accounts that collectively hold around R18 crore.
FTIL on Friday clarified that there were “no search operations/raids... conducted by EOW at the corporate office of FTIL.” “... EOW had come for search operations in the premise of National Spot Exchange (NSEL) on 30.09.2013 which is situated at 4th Floor of FT Tower,” stated a stock exchange announcement by FTIL.
The EOW is the second probe agency to initiate action against entities alleged to be involved in the settlement crisis amounting to nearly R5,600 crore. The income-tax department