SIT probe finds cheating case against National Spot Exchange

A special investigation team (SIT) set up by the Economic Offence Wing of Mumbai Police was today reported to have got crucial evidence of actual cheating by the troubled commodities operator, National Spot Exchange Ltd.

A senior official and member of the SIT anonymously told India Today that "Prima facie, NSEL has cheated its investors by misrepresenting facts and ground realities." Further official developments are likely this weekend.

In its preliminary investigation, which was carried out almost a month ago, the SIT found details that indicate the NSEL management was dishing out incorrect information to investors on the status of spot contracts, commodity stocks in warehouses, and related trading issues.

The investigation team would submit its report to police commissioner Satyapal Singh and joint commissioner (crime) Himanshu Roy next week. The two senior officials would then take decision on what charges a first information report (FIR) could be filed against NSEL and other parties involved.

A full investigation would start after the FIR has been registered. This will include taking statements from NSEL officials and defaulters (if found shady), de-freezing of bank accounts, and arrests. These actions would be taken under the Indian Penal Code and the Maharashtra Protection of Interest Depositors Act.

The SIT has for the last month or so been examining all the complaints filed by investors and counter-complaints by NSEL against its own chief executive Anjani Sinha and others.

"As soon as investors (including Kirit Somiya of the Investors Grievance Forum) filed a complaint in the Rs5,600 payout crisis, we collected all required data and documents from NSEL, the FMC (Forward Markets Commission, the commodities market regulator) and the Registrar of Companies. We verified all the allegations and counter-allegations. And as of now, prima facia is NSEL has cheated its investors," the report cited an official as saying.

He added, "Now our major focus of investigation is to check who are the responsible behind this cheating and where the money has gone. Are the officials who have been blamed by NSEL (like Anjani Sinha and others) or the promoter group himself, we need to investigate."

The SIT official did not rule out questioning the promoters of NSEL, including chief promoter Jignesh Shah.

In addition, the FIR would strengthen the hands of the Enforcement Directorate (ED), which is awaiting an official complaint to be registered in the NSEL scam case, so that the directorate can start its own investigation in under the Public Money Laundering Act (PMLA).