)
The board of directors of Multi Commodity Exchange (MCX) will meet on Thursday (on February 27) in Mumbai to decide on the course of action to be taken, following the revelations in a recent report submitted by forensic auditor PricewaterhouseCoopers (PwC).
“The report has pointed to money going to entities, which are non-existent. If true, this amounts to embezzlement -- a serious charge that invites its own course of actions. The board will take a call on this and several other issues raised (in the report),” a senior official familiar with the development said.
The Forward Markets Commission (FMC) had written to MCX seeking its comments on the report. MCX is likely to give its comments to FMC following the board meet. The 15-day deadline given by FMC expires on February 28. A MCX official, whom Business Standard contacted, refused to comment on the issue.
While embezzlement charge is likely to invite criminal prosecution, it also has implications under securities market regulations such as Prevention of Fraudulent and Unfair Trade Practices (PFUTP) regulation, as MCX is a listed entity.
In a clarification, issued following media reports on the report, MCX said the PwC interim report was referred by the board to audit committee on February 13. “The audit committee has since interacted with the PwC team. This is an interim report submitted by PwC on which certain additional inputs are sought by the audit committee and final report is awaited from them. Once the final report is submitted by PwC, the same shall be duly communicated to the stock exchange,” the exchange said.
The PwC report, which was submitted to FMC recently, has talked about several irregularities in the functioning of exchange, including huge payments made without backing of proper documentation and related party transactions. It has raised issues about untenable agreements with technology partners and related parties such as FTIL.
The findings largely pertain to a period before the Rs 5,600 crore NSEL payment crisis broke, when MCX was run by a board that included FT group promoter Jignesh Shah, former MCX SX chief Joseph Massey and Shreekant Javalgekar. The trio was later declared not fit and proper to run the exchange as they had also served on the board of NSEL. They have challenged the order in Bombay High Court.
