NSEL accused move money from 'attach' account due

MUMBAI: Jignesh Shah promoted companies had siphoned off Rs 1170 crore from their ‘attached’ account due to negligence of Economic Offences Wing (EOW) officials of the Mumbai police who were investigating a fraud case against them. This came into light while physical examination of the attached assets by the Enforcement Directorate (ED), which is investigating a separate money laundering case against the same accused in the Rs 5,600-crore National Spot Exchange (NSEL) scam.The Shah promoted company Financial Technologies (FTIL) owns 99.99% stake in NSEL.
The ED managed to trace the assets, consisting of bonds and securities worth Rs 1,065 crore and Rs 30 crore bank deposit, within a month and half of investigation. They provisionally attached it on Friday before the accused could move it to a safe place.
The NSEL management and its associates had forged documents, bogus warehouse receipts and manipulated account to cheat around 13,000 investors. In 2013, the EOW had registered a case of fraud against NSEL management and during the probe they had ‘secured’ Rs 2,000 crore worth of properties of FTIL, including mutual funds worth Rs 1,170 crore under the Maharashtra Protection of Interest of Depositors (MPID) act. EOW decided to wait for state government approval to attach the assets.
Sources stated that the EOW officials didn’t inform the banks and concerned authorities to ‘secure’ the assets for attachment. It helped the accused to convert the mutual fund units, which EOW claimed to have secured for attachment, into government bonds and cash after transferring it into different company accounts and show it legitimate profit for further use.
Based on the EOW case, the ED has registered the case of money laundering worth Rs 1,348 croreagainst NSEL and its promoters. ED now suspect that between 2008 to 2014, they had also utilized settlement guarantee fund to repay NSEL’s overdraft facility with banks.
The ED has asked the EOW about the documents and investigation details for examination. The ED officials came to known that the accused had converted the mutual funds units, which EOW was supposed to have attached, into government bonds and cash. After establishing the money trail, the ED on Friday provisionally attached these assets. They have also informed banks and other concerned authorities to secure these assets.
The NSEL allowed trading on commodities by sellers, without ensuring goods of appropriate quantity and quality stored in the exchange-controlled warehouses which resulted in thousands of investors trading in non-existent goods.