The Enforcement Directorate (ED) has attached an estimated Rs.75 crore worth of assets of a borrower company and its associates in connection with money laundering probe of the National Spot Exchange Limited (NSEL) scam case.
This is the first attachment order issued by the agency, under Prevention of Money Laundering Act laws.
The NSEL scam is a Rs. 5600 crore fraud, which came to light after NSEL failed to pay out its investors in commodity pair contracts after July 31, 2013.
It was subsequently found out that the most of underlying commodities never existed and buying and selling of commodities like steel, paddy, sugar, and ferrochrome etc. was being conducted only on paper.
The pair trades in various commodities were offered in one day forward contracts of T+2 and T+25 [2](sometimes even T + 35) payment terms (bought and sold at the same time).
This offered an arbitrage opportunity of about 12 to 15 per cent per annum.
Investors who honored their T+2 payment obligation found that NSEL neither had money nor commodities to honor their T+25 obligations to investors.
About 24 borrowers were given the funds by NSEL without any underlying commodity deposited by them.
One of the borrowers who has taken away around 1000 Crores is N K Protein Ltd which is owned by the son-in-law of ex chairman Shankarlal Guru.
About 15000 investors along with public sector units like MMTC and PEC are also affected.
The ROC report on NSEL fraud has come down heavily on promoters and FTIL.
It was found that a majority of board minutes of NSEL were fabricated as mobile locations of board members do not match.
Some of the warehouses mentioned on NSEL website did not exist and even the SGF (Settlement Guarantee Fund) which was supposed to be about Rs. 839 crores (about USD 140 Million) as on July 29, 2013 vanished into thin air.
Anjani Sinha the sacked CEO and MD of the company tried to take all the blame on himself (in an attempt to exonerate other promoters) and filed an affidavit.
Sinha's wife Shalini though being a related party traded on MCX for about Rs. 40000 crores in a year through her company SNP Designs P Ltd.
