 "NSEL calls Rs 5,600-cr payment crisis 'a conspiracy'")
In a first-of-its-kind effort by an entity at the centre of a multi-agency investigation and a web of legal proceedings, the spot exchange said it had produced the publication to illustrate "How Financial Technologies, which created an extensive ecosystem of exchange institutions across Asia and Africa, is demonised and systematically demolished for payment defaults at one of its subsidiaries, owing to abrupt action by the ministry of consumer affairs on the ill-advice of the Forward Markets Commission."
"NSEL, unfortunately has been prey to a conspiracy carefully crafted by an unholy alliance of market competitors, some bureaucrats and their political masters. The crisis was engineered by fuelling the market with the objective of first contriving a settlement default and then disallowing a calibrated shutdown, which culminated in a payment crisis for the exchange. This crisis was thus used as an opportunity and excuse to kill the group, once and for all. The book describes the sequence of events in detail," Prakash Chaturvedi, joint managing director, NSEL, wrote in a communication shared with select journalists.
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While the first volume had detailed chapters explaining the NSEL's point of view on various aspects, the second contained several official documents, orders and other testimonials in support of these arguments.
One of the main focus areas of the paper is to argue against the draft order of the merger of NSEL with its parent FTIL by the ministry of corporate affairs. "It also articulates the concerns of its parent company FTIL, which has faced unnecessary pain and punishment for no fault of its. Moreover, the 63,000 shareholders of FTIL are being made a scapegoat for the sins of others," the publication noted. However, it said FTIL was "not associated with any aspect of the paper and thus not responsible for any points of view made in this paper."
The book went on to allege that the entire crisis was orchestrated to satisfy the "egos of a couple of officials" who were keen to destroy the group at the behest of competition. "Can India afford such officials who could undermine national interest? How history will consider their actions is yet to be decided, but destroying value in pursuit of protecting the limited interests of a few competitors…" it asked rhetorically.
The book begins with a timeline titled 'The contours of conspiracy' in which it refers to a letter by a finance ministry official, who was acting in favour of competition and allegedly harboured a "personal vendetta" against the FTIL group.
Pointing to how regulatory agencies while relying on a multitude of audits conducted by various entities have ignored the disclaimers given by these audits, NSEL compared the actions with those taken by other international regulators and some other sectoral regulators in other cases.
It criticised the manner in which FMC singled out the FTIL group while ignoring other entities which also played a role in the crisis, and suggested the steps that could have better resolved the crisis. 'The truth about NSEL' also reiterated other NSEL arguments such as the failures of the "then NSEL management" led by Anjani Sinha and how the board was not complicit in any of the irregularities.
On the crucial issue of missing underlying stocks in NSEL warehouses, the book has a box titled: 'Missing stocks: How it could have happened?' But the item did not adequately answer the question. Instead, it said there were several checks by brokers, officials of public sector clients and even auditors, none of whom raised any red flags. "When all these measures never raised any red flags over the stocks in the warehouses, blaming the NSEL board and FTIL for missing stocks and attributing motives is plain unjust and unfair," the booklet argues.