NSEL Was An ‘Employee Fraud’, Could Have Been Resolved Within Six Weeks, Says Jignesh Shah
More than six years after his erstwhile spot exchange National Spot Exchange Ltd. got engulfed in an alleged Rs 5,600-crore scam, embattled businessman Jignesh Shah has said it was “an employee fraud” done in connivance with some defaulter brokers.
He added that it could have been resolved in flat six weeks but for a political conspiracy hatched at that time to help his business rivals.
Shah, who had to eventually exit all the exchanges and related businesses set up by him, including the flagship Multi-Commodity Exchange, said it is still possible to resolve the case within four-six months by following the “right path” to recover the entire amount of Rs 5,600 crore from defaulter brokers and all genuine claimants can get their full dues.
In an exclusive interview, Shah told PTI that he is hopeful about the resolution as also about punishment to all those who were party to the fraud, as he feels there is a conducive political environment in the country under Prime Minister Narendra Modi.
He said his primary focus over the last six years, while fighting legal cases and attacks from vested interests, has been the recovery process and refund of dues to all genuine claimants.
Shah said the recovery group at NSEL has managed to establish full money trail of the entire amount of Rs 5,600 crore, assets worth over Rs 8,000 crore of defaulters have been attached, Rs 3,300 crore of decrees and arbitration awards have been obtained and the same for the balance amount was underway.
“If we get cooperation from the agencies and the government, in the next three-four months, we can obtain full decrees for all 17 defaulters for the entire amount of Rs 5,600 crore, along with arbitration awards and injunctions,” he said.
“We have already filed for execution of these decrees at various courts and we have also moved an application at the Supreme Court to centralise the execution,” he said.
The 52-year-old businessman, who went on to be known as India’s Exchange Man for successfully launching 14 exchanges across six continents, including MCX in 2003, has been fighting a prolonged legal battle on multiple fronts ever since NSEL crisis broke out in 2013.
Shah, who was jailed thrice and then released between 2014 and 2016 (first by Mumbai Police's Economic Offence Wing in May 2014 and then by Enforcement Directorate and the Central Bureau of Investigation in 2016), said he always has had great faith in the judiciary and his stand is getting vindicated by the court orders one after another as no agency has found any money trail to him or his group firms for even a single paisa.
One of the latest victories for him came late last month when the Bombay High Court ruled that the NSEL was not a financial establishment and quashed the attachment of assets, including bank accounts and properties, of 63 Moons Technologies, the parent company of Shah-led group which was earlier known as Financial Technologies.
Earlier this year, the Supreme Court set aside a government order to merge NSEL with 63 Moons, while the NCLT last year had dismissed a plea of the Corporate Affairs Ministry to supersede the 63 Moons' board under the rarely-used Section 397 of the Companies Act.
Shah said he became target because he challenged some "really powerful people and their money-making and money-laundering machines".
“We were number one in commodities trading, electricity, currency, bonds and in everything we were doing and we had got the licence for stock exchange where the NSE had a dominance,” he said.
“It was an employee fraud done in connivance with defaulter brokers. And parallel to this, a political conspiracy was hatched to benefit the National Stock Exchange,” Shah said, while accusing former Finance Minister P Chidambaram of playing a role in all the actions against the FT group.
“They wanted to eliminate the FT group from the exchange space, because we were the only competition to their pet exchange,” he said, while urging the government to probe the interest of the Congress leader and of people close to him in the NSE and in the controversial co-location facility at that exchange.
63 Moons has filed a defamation suit, seeking Rs 10,000 crore in damages, against Chidambaram and two bureaucrats in the Bombay High Court, alleging it was facing continuous “targeted and malafide actions” in the wake of an “engineered payment default crisis” at the NSEL.
Chidambaram is facing summons from the Bombay High Court regarding the defamation suit and had sought a copy of the complaint and other relevant documents days before his arrest by the CBI on Aug. 21 in connection with an alleged corruption case involving INX Media.
Shah alleged the co-location technology can facilitate a “super white collar crime”, as even a fraction of second advantage to trading terminals can result in billions of dollars worth of illegal gains.
“The NSEL was the smallest exchange in the entire FT group. An employee fraud happened and we were the first to complain to the regulator against all 24 defaulters and also to the police,” he said.
Shah said the defaulters had admitted and had agreed to pay back in front of the full Forward Markets Commission (the erstwhile commodity regulator) in presence of brokers, traders, the exchange and its promoter.
“Everything was through banking transactions and therefore up to the last paisa, the money trail was fully established. And the government had given absolute power to FMC for recovery and attachment,” he said, while alleging that the orders from the Finance Ministry at that time derailed the entire process as they unsuccessfully tried to put the entire blame on him.
“It was like if you want to go from Mumbai to Delhi, the vehicle was pushed towards Kanyakumari. The purpose was to finish Jignesh Shah who was group chairman of 14 exchanges across six continents and his businesses were taken away one after another by arm-twisting,” he alleged.
“However, now I am hopeful that the process would be put on the right path and fast-tracked as there is a strong and committed government in power that can act against all wrongdoers decisively,” Shah said.