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Independent Director Sanjay Shah link drags Edelweiss Group into ED case

The company admitted it has received a communication (not a summons for Rashesh Shah to appear personally) from the ED to appear and provide information about Edelweiss Group companies' dealings with a company called Capstone Forex

twitter-logo BusinessToday.In        Last Updated: January 11, 2020  | 00:26 IST
Independent Director Sanjay Shah link drags Edelweiss Group into ED case

The Enforcement Directorate (ED) summons to Edelweiss Group is linked to one Sanjay Nathalal Shah, an independent director in some Edelweiss group companies, which has dragged the company into an alleged foreign exchange violation case worth Rs 2,000 crore.

The company admitted it has received a communication (not a summons for Rashesh Shah to appear personally) from the ED to appear and provide information about Edelweiss Group companies' dealings with a company called Capstone Forex Pvt Ltd.

In an anonymous unsigned letter to the Prime Minister, there is mention of Sanjay Shah as the right hand man of Edelweiss group chairman. The letter goes on to talk about alleged foreign exchange violation by Edelweiss Financial Services and Chairman Rashesh Shah with the help of Sanjay Shah. "We would like to state that none of our companies have any transactions with this company - Capstone Forex," stated Edelweiss group in its statement on Friday evening.

Business Today is not able to verify the authenticity of the unsigned letter to the Prime Minister.

ALSO READ:ED summons Edelweiss Group chairman Rashesh Shah in alleged forex scam

The letter talks in detail about Sanjay Shah and his deeds. The Edelweiss Group companies mentioned in the letter where Sanjay Shah is a Director are Edelweiss Finvest Private Ltd, Edelweiss Fund Advisors Private Ltd, and Edelweiss Retail Finance Ltd.

People in the know say Sanjay Shah has no direct connection with Capstone Forex Pvt Ltd. In fact, Sanjay Shah's distant relatives have some connection with Capstone Forex. Edelweiss group has reacted strongly to the news as the summons impacted the share price of flagship Edelweiss Financial Services. The stock crashed 9.56 per cent to Rs 106. "We further deny wild and baseless allegations contained in the news items which are apparently attributed to unidentified sources. We are in fact shocked at the spread of unauthenticated allegations and the inference being drawn from it," it says.

Edelweiss is planning to approach market regulator Sebi and the police for filing complaint against motivated people going after the group. Edelweiss Financial Services with total income of Rs 10,881 crore and profits of Rs 1,044 crore has a market capitalisation of Rs 9,920 crore.  Company insiders say the summons are to the company and not directly to chairman Rashesh Shah. Shah owns 32.95 per cent in Edelweiss Financial Services, while other big investors include HDFC Mutual Fund, LIC and Rakesh Jhunjhunwala among others.

ALSO READ:Edelweiss Financial Services shares fall 10% after ED summons Group chairman Rashesh Shah

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