‘The Target’ deals with plunder of Jignesh Shah’s empire

Investigative agencies like Forwards Market Commission (FMC) are government bodies who are expected to give a fair chance to both the victim and the accused during their enquiry. Unfortunately for Jignesh Shah, the FMC played puppet in the hands of powerful politicians and bureaucrats to ruin the company most strategically.  The following excerpt from Shantanu Guha Ray’s ‘The Target’ will describe how the balance of justice shifts according to priorities.

The FMC had also stated in the same letter that there was a possibility that these defaulters may have diverted the funds, and have therefore violated the Prevention of Money Laundering Act (PMLA). In fact, the defaulters were found to indulge in cheating, forgery, theft, breach of trust, bank stock hypothecation, investing the default amount in purchasing benami properties and making the recovery process extremely complicated. But the FMC took no action against them at all.

Most of these defaulters have reportedly invested the default money in prime properties or elsewhere. For instance, although the EOW of Mumbai Police had arrested a defaulter, Ramesh Nagpal, Proprietor of Shree Radhey Trading Co, Saharanpur on March 1, 2016 for his inability to pay up his dues of Rs 34 crore, he had already purchased and gifted his son Sunny Nagpal, a four- bedroom flat in Kharghar, Navi Mumbai’s prime property area. Despite this fact, no action has been taken against similar other defaulters. Neither have the defaulting companies been merged nor have their bank accounts been sealed. Their managements have not been changed either.

The FMC did not take any action at all against the defaulters, despite the fact that the EOW of the Mumbai Police had established a clear money trail to the 24 defaulters also stating that no money trail was found to NSEL, FTIL or its non-executive directors.

The perfect aim at ‘The Target’, Jignesh Shah.

With Jignesh Shah on the aim of top politicians and bureaucrats because of his quick rise to the heights people seldom dream of, the beartrap made for him was inescapable. But what they didn’t notice was that they had left a trail of footprints to follow. Shantanu Guha Ray, a former tehelka journalist, stuck to his roots of investigative journalism and deduced the ultimate truth out of it.  Ripe with myriad anonymous conversations, Shantanu has managed to create the suspense yet veil the curtains off the facts.

Here is an example of such interesting excerpt from the book:

This one was narrated to me by a bureaucrat friend in Delhi, the person spoke on condition of total anonymity. Soon after the NSEL mess happened, a few civil servants – two from the MoF and one from the DCA – sat down together to ruminate and ponder over the problem. They even got an analyst who was an expert in markets, to specifically explain the minute details of the NSEL payment crisis.

So what did the brokers do in the NSEL crisis, asked one bureaucrat?

The expert crisply summed it up as the handiwork of dubious brokers. They did a lot of things that were fundamentally illegal. They created a structured product involving a contract for simultaneous buying and selling of commodities on the NSEL platform, thereby ignoring NSEL’s dictum to inform the clients of the risks involved in such simultaneous buying and selling of commodities. Worse, there was aggressive marketing and mis- selling apparently promising assured returns in violation of NSEL’s circulars. There were various instances of funding clients that should not have been done. Yet, for such dubious deals, to avoid income-tax, business income was illegally offset with questionable losses and expenses incurred on dubious deals.

A lot of tools were used to fire the guns, bureaucratic power, political clout, police and even internal commotion, but throughout the whole scenario the target remained unchanged, Jignesh Shah.

Jignesh Shah: The other side of the Target

A common bollywood story has a hero and a villain. A drama has long been playing in the backdrop of politics and stock exchange market. This drama too had a protagonist and an antagonist, but the viewers are still confused about who is who. The curtain unveiled a few days back with a well investigated script ‘The Target’.

The story of Jignesh Shah has been on a road full of ups and downs. It seems he was too focussed on reaching the horizon, but again, the road of business never comes with the  sign ‘Bumps Ahead’. Shah was awarded US-India businessman of the year in 2006, little did he know that in the coming years life was about to take a U turn. In ‘The Target’ Shantanu Guha Ray mentions:

In less than a decade, DGCX had positioned itself as a global financial hub, adjudged ‘Exchange of the Year 2013’, trading in bullion, currency and metals in Dubai (historically an important centre for trading in gold and other commodities).

This was a historical milestone for India, but in Delhi no reactions were forthcoming from the government, even the bureaucrats did not talk about the ground-breaking move. On the contrary, the government sent out feelers through the Mumbai-based Reserve Bank of India (RBI), wanting to know what was happening in Dubai, and whether or not Shah and his men were flouting the rules.

On one side where Jignesh Shah and his company were trying to restore the glory of Indian economy, everything else back home  was going wrong. Ray further clarifies this:

That was strange, if not absurd. A country that awards instant stardom to an Indian, who becomes the CEO of a global company, had no words of appreciation for an innovator and entrepreneur, who had achieved global recognition for excellence in building world-class financial institutions and services through lucid, well-regulated and well-audited processes.

However ‘cinematic’ the story may seem, all the events and characters in it are real. A lot of it has remained untold for years, but new facts have been brought in light which help us know more about the other side of the coin.

source url: http://www.newsking.us/jignesh-shah-the-other-side-of-the-target/

Jignesh Shah Pegged Back, Framed?

Jignesh Shah’s life is no less than a Bollywood script. His rise as ‘The Exchange Man of India’ empowered millions to lead a proud life. He proved his mettle by creating beacons of growth for the Indian economy such as MCX. The way NSEL case has panned out shows forces going out of the way to frame him on flimsy grounds.

From the time he started to show his growth and formed a grip over the exchange market, efforts were made to pull him down and hamper his growth. All his efforts were seemingly going in vain due to multiple incidents, canards and rumours that targeted him.

i.    There was immense pressure on Shah to sell his share to a certain bank, keeping in mind the loans that had been taken. On the contrary, repayment was done in time.

ii.    MCX had to undergo an income tax raid. Even after not finding anything against Shah or MCX, this raid was used as an alibi to disallow him to set up other exchanges.

iii.    FTIL was blacklisted on the basis of a complaint that dates back to almost 10 years and was sorted out too.

iv.    Traders working with FTIL had to undergo a hard time. Approvals for trading to those brokers who preferred Jignesh Shah’s exchange products had to face the brunt of delay, indirect threats and fear of penalties.

v.    There were umpteen efforts to stall MCX public issue by pushing detractors to file frivolous complaints.

vi.    Shah was refused for MCX SX license for equity market segment which was won only through Supreme Court’s intervention.

vii.    MCX proposed several times for a unified regulatory agency for spot, futures and warehousing segments in Indian commodity market system which was never taken in consideration. However, when NSEL case created a spur, it was made to look like MCX was avoiding regulations!

A man who went on to take India’s exchange platform to a different level, regarded as one of India’s greatest visionary, credited with projects that offered employment to millions caught in a web of inexplicable investigative moves springs up multiple questions–is there a plot to this, is it a conspiracy which if decoded may stun the nation as those behind it are bared?

A Merger Order That Hurts Public Interest

In February, the passing of an executive order caused ripples in financial circles across the country, even abroad. Passed by Ministry of Corporate Affairs, it relates to forcing the merger of NSEL with its parent body FTIL. Interestingly, that holds against the ministry’s own circular dated April 20, 2011.

The order stands judicial scrutiny for obvious reasons but what is more baffling is the rationale behind it and the hurry it entails. Billed to be in public interest, it can’t defy public interest any more as it clouds over the fate of over 63k FTIL investors. 

NSEL as a body has its own assets and liabilities. That in turn implies that a merger of this body with any other body is unfair, let alone forced. Currently, it has a crunch of Rs. 5600 crore, and overburdening shareholders of FTIL who have a cash reserve of Rs. 2000 crore serves no one.

Understandably, NSEL traders are under the gun too but how does that make the merger any more sensible than sacrificing one body part to save another.   For the 63k shareholders of FTIL, it would be a hard blow as it erodes their net worth and makes them commercially unviable. Now if that happens—no one gains--not even NSEL stakeholders!

It should be clear beyond all doubt that the cash reserves and all profits that arise on the balance sheet of FTIL belong solely to its shareholders. Anything that takes it away from them is a clear violation of their legal right and must not happen for more reasons than those that meet the eye.

People from across the world are watching how we treat a private sector entity and it can be safely said that the picture being formed is not rosy. It hurts India’s reputation as an investment destination and it hurts PM Modi’s pet project ‘Make in India’ and one of the better known faces that has exemplified it-Jignesh Shah.

The merger order seems to be a classic example of financial imprudence and it is to be seen how the court views the whole issue.  However, the silver lining could lie in the recent developments rounding up NSEL brokers and traders who have for long managed to stay untouched. Could it be that after all this while dissent against the merger finally has investigating authorities ruffled up?

Brokers under the scanner in NSEL Scam

Probe into irregularities worth Rs 5,600 crore in the NSEL case is finally penetrating untouched territories. Recently, the Bombay High Court panel ordered audits into investor claims observing discrepancies in the figures submitted by NSEL traders and brokers; a move that widely vindicates Jignesh Shah’s position on the case.

Furthermore, fresh evidence around black money being routed by sister concerns and associates of various NSEL brokers has caught investigators’ attention.  

"It has also been alleged that funds of sister concerns of brokers, which could have been derived from illegal sources, were used to trade on the NSEL platform with an intent to legitimise the said funds, which amounts to money laundering," a senior investigating official said.

The interim order of the HC panel already states, “The committee while processing the claims received from various investors noticed large scale discrepancies between the claim set up by the investors vis-à-vis the data submitted by NSEL. Even the discrepancies in Permanent Account Number were noticed.” It observed 15 instances of such discrepancies with respect to 8 brokers. The order also stated that no reservations would be made I submitting data and information for verification of investor claims.

It should be noted here that there have been complaints against brokers, in the past, related to false assurances, misrepresentation, trading without client’s authority, modification of client code and selling contracts as investment vehicles. There have also been allegations against NSEL brokers and traders for having created fake ledger accounts in the name of their clients without their consent.

While commenting on the case, a senior regulatory official stated that the case seems to be unique as brokers themselves appear to be investors. This is quite in sync with Jignesh Shah’s stand on the issue and the line FTIL has towed since the beginning.

The investigation holds special significance in respect to the facts of the case. Considering the role brokers play on any exchange, the investigation could lead to a landmark step but the questions is—couldn’t it have come earlier especially with FTIL investors, who stand to be crippled pending the forced merger, vehemently trying to get heard ever since the scam broke out. 

Read more

Bombay HC tightens up on brokers in the NSEL case