 "NSEL scam: Shah remanded to ED custody till July 18")
The ED had arrested him on Tuesday under the Prevention of Money Laundering Act (PMLA), for ‘non-cooperation’ and on the basis of 'fresh findings' related to the Rs 3,721-crore money trail in the case. The agency had filed a chargesheet in the court against NSEL and 67 others in March last year under the PMLA.
“Shah was one of the main architects involved in money laundering activities. The proceeds of crime identified under PMLA is to the tune of Rs 831 crore. The investigations to trace the further money trail are in progress,” said ED in the remand plea.
It says subsidiaries were created to route the crime proceeds, in a conscious effort to bring the illicit gains to the financial system and to project it as untainted. Shah, it charges, appears the brain behind these multi-layered transactions. And, it says, he is not cooperating with it.
During the hearing, ED counsel Hiten Venegaonkar said the probe agency came across certain leads related to financial transactions between FTIL and its wholly-owned subsidiary, Indian Bullion Market Association (Ibma), and defaulters of NSEL. It has cited what it says are revelations made to it by Shrikant Javalgekar, an erstwhile aide of Shah and on the NSEL board.
“Shah has used its (FTIL) subsidiary companies like Ibma and NBHC (National Bulk Handling Corporation) for bogus trades and money laundering,” said the ED counsel. Adding the ‘ultimate beneficiary’ of business activities of all the FTIL group companies was Jignesh Shah, and he was majority shareholder of FTIL.
“This is a much awaited and welcome development. The focus should be on recovery, and the ED is the most appropriate agency to investigate this matter, as most of the funds have been laundered and siphoned. We hope the miscreants get the message and monies are recovered soon,” said the NSEL Aggrieved and Recovery Association, one of the investor groups. The counsel said a supplementary complaint was also filed under PMLA. “Custody is required to get further transactions’ details,” added the lawyer.
Jignesh Shah's counsel, Abad Ponda, strongly opposed his custody plea. He said there was no such new finding that needed a supplementary complaint. Ponda alleged the enforcement agency had breached the PMLA court exemption given to Shah on July 7 on his personal appearance and also the assurance on applying for anticipatory bail.
On July 7, the court had directed all the 68 accused named in the chargesheet to be present before it court on July 18. The ED registered a case under PMLA in September 2013 to probe the NSEL case. The probe agency has so far issued attachment orders for Rs 800 crore in the case. Shah had also been arrested by the economic offences wing of the citypolice in May 2014 and was released on bail in August 2014. He then resigned as managing director of FTIL and became its chairman emeritus.
The scam came to light on July 31, 2013, when NSEL failed to pay its 13,000 investors in commodity-pair contracts. Due to this, investors lost nearly Rs 5,600 crore, as it was found NSEL had neither the money nor the stock to pay them back.