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NSEL scam: Jignesh Shah remanded in ED custody till July 18

The ED on Tuesday arrested Shah under section 19 of Prevention of Money Laundering Act (PMLA), saying he was not cooperating with the ongoing investigation.

twitter-logoPTI | July 14, 2016 | Updated 07:47 IST
NSEL scam: Jignesh Shah remanded in ED custody till July 18
Photo: Reuters

A local court on Wednesday remanded FTIL founder Jignesh Shah in Enforcement Directorate's custody till July 18 after he was arrested on money laundering charges in the Rs 5,600 crore National Spot Exchange Ltd scam.

The ED on Tuesday arrested Shah under section 19 of Prevention of Money Laundering Act (PMLA), saying he was not cooperating with the ongoing investigation.

The PMLA court, while remanding Shah in ED custody, rejected his plea for interim bail.

ED lawyer Hiten Venegaonkar contended that huge amount of money was laundered and Shah's acts constituted a very serious economic offence.

His sustained interrogation was required to unearth the trail of syphoned off funds, Venegaonkar said, adding ED needed his custody to confront him with other accused and suspects who had indicated they were acting as per his directions.

Being an influential person, Shah could influence other witnesses and tamper with evidence if he was allowed to remain at large, the ED lawyer said.

Shah had been named in the first charge sheet filed by ED in the case last year.

Venegaonkar argued that new material had come to light indicating that Shah indulged in money laundering. Therefore, ED wanted to file a fresh complaint of money laundering for which it needed his custody for eight days, he said.

The estimated losses to the investors were to the tune of Rs 5,600 crore and the "proceeds of the property" attached during investigations were to the tune of Rs 837 crore.

Investigation to trace further proceeds was in progress, ED told the court.

According to ED, Shah was the main architect of the money laundering activities related to the scam. He created subsidiaries to route the proceeds of the crime in a conscious efforts to make illicit gains and project them as untainted, it says.

Following a high-level meeting chaired by Economic Affairs Secretary Shaktikanta Das last month, the Centre directed Maharashtra government to expedite the resolution of the case by quickly auctioning assets worth Rs 6,116 crore attached so far and refund investors at the earliest.

NSEL's payment troubles started after it was ordered by the Forward Markets Commission in July 2013 to suspend the spot trade due to suspected trading violations.

The exchange could not settle the outstanding trades, sparking an investigation as to whether it had defrauded traders by not enforcing rules requiring sufficient collateral.

Financial Technologies India Ltd blamed NSEL executives and the trading parties for the default. There were 24 members who defaulted payment to about 13,000 investors.

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