India's premier investigative agency, the Central Bureau of Investigation (CBI) Thursday carried out search at multiple locations, including the premises of NSEL promoter Jignesh Shah, after registering a case of alleged cheating against him and others in the investments of state-run PEC causing a loss of Rs 120 crore to the exchquer.
CBI has named Shah, NSEL, former CEO of National Spot Exchange Limited (NSEL) Anjani Sinha, officials of PEC including Chief General Manager Rajiv Chaturvedi and a number of other companies as accused in the case of alleged cheating, forgery and corruption, highly placed sources said.
CBI Director Ranjit Sinha said while the focus of Mumbai Economic Wing probe is to look into investors' complaint, the agency is looking into the loss caused to PEC, a public sector undertaking, as a result of the conspiracy.
CBI spokesperson said the case has been registered on the allegations that the accused persons during the year from 2007 to 2013 were party to a criminal conspiracy to cheat PEC Ltd "...in the matter of floating accommodative and fraudulent paired contracts for trading of agro commodities on the platform of Mumbai-based company without actually undertaking any genuine trade," spokesperson Kanchan Prasad said.
After registering the case, a CBI team carried out searches at 15 locations including the residential premises of Shah and Sinha and officials of PEC, NSEL and six counter-parties involved in the alleged crime.
Without giving out details of the FIR, Prasad admitted that the searched locations included residential premises of five PEC officials, two of NSEL officials and one of private persons, seven offices of NSEL and six offices of counterpart in PEC transactions.
The sources also said reports of a major cash haul from a former executive of NSEL, whose premises were searched, were completely inaccurate.
"Certain officials PEC Ltd. abused their official position as public servants and allegedly invested in purchase of agro commodities of PEC Ltd on the platform of Mumbai-based company (NSEL) without ensuring any physical delivery of the commodities and without obtaining documents of title," Prasad said adding it caused loss of Rs 120 crore to PEC.
She said charges levelled against the accused include criminal breach of trust by public servant, cheating, forgery and provisions of Corruption Act.
CBI sources said the probe so far shows NSEL claimed before PEC that it has designated warehouses where commodities can be kept and it would issue warehouse certificate for the same. The sources said these certificates were issued even though no products were physcially brought to the warehouses.
These warehouse receipts are used to sell commodity to the buyer against receipt of funds and under a separate contract, the investor would sell the purchased commodity to the second-tier investor.
In the absence of any designated warehouses or any backup in terms of actual commodity stock there was nothing that could be liquidated as recovery against their investments, the preliminary probe shows.
About Rs 343 crore of state-owned trading firms MMTC and PEC is stuck with the crisis-ridden National Spot Exchange which has to settle nearly Rs 5,500 crore with 148 entities including many brokerage firms.
NSEL, promoted by Jignesh Shah-headed Financial Technologies India Ltd (FTIL), was hit by crisis after it suspended trade on July 31 last year following a government directive, raising concerns about possible default of Rs 5,600 crore due to about 13,000 investors, including 7,000 small ones.
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