FTIL: How 'Made in India' was killed before 'Make in India'?
Two years after a Rs 5,574.35-crore payment crisis at the National Spot Exchange Limited (NSEL) rocked the corporate world in 2013, the issue continues to remain at the centre of a multi-agency probe and a web of legal proceedings and endless blame game. Though the judiciary is yet to assess who was at fault, confidential documents accessed through an RTI application which are now with Bureaucracy Today indicate that the crisis in India's first spot commodity exchange was a conspiracy carefully crafted by an unholy nexus between some bureaucrats and market competitors.
By BT Bureau
Now two years down the line, RTI documents reviewed by Bureaucracy Today reveal possible deeper game plan by some bureaucrats in the then UPA Government in connivance with some officials of the Forward Market Commission (FMC) to sabotage the Financial Technologies India Limited (FTIL), the parent company of the NSEL, which was giving a tough competition to the National Stock Exchange (NSE). And in doing so, the “vested interests” allegedly destroyed over one million jobs in the country created in no time by the FTIL group.
Interestingly, the Economic Offence Wing (EOW) of the Mumbai Police and the Enforcement Directorate (ED), which are probing the NSEL scam, have established the entire money trail “up to the last paisa” to 24 defaulters. The Bombay High Court has also ascertained the fact that neither the FTIL nor Shah nor any of his companies have received a single penny of the disputed sum.
‘DUBIOUS’ ROLE OF FMC
According to the RTI documents, soon after the trading was abruptly halted at the NSEL on July 31, 2013, the FMC on August 4, 2013 met all the 24 defaulters on a “one-on-one meeting where the defaulters committed to the liability of stocks and money and also took responsibility to pay the money in a phased manner”.
“On August 6, 2013, the Government gave wide-ranging omnibus powers to the FMC to take punitive action against the defaulters. However, surprisingly the FMC did not take any action against any of the defaulters,” a source privy to the developments tells Bureaucracy Today.
The FMC has recommended the merger of the NSEL with the FTIL under Sections 396 and 397 of the Companies Act, a move challenged by the NSEL in the Bombay High court. The issue is presently sub-judice.
Accusing the FMC of “goofing-up” the NSEL issue, a top level NSEL official, who does not want to reveal his identity, tells Bureaucracy Today, “Despite the NSEL sharing all information on its trades and contracts since 2011, over three years before the crisis erupted, with the FMC and clarifying on its queries, it(FMC) wrongly informed the Ministry of Consumer Affairs that the NSEL has violated norms and advised its abrupt closure.”
Market experts raise questions that if the exchange was running illegal contracts from day-one, why was the NSEL allowed to do so by the FMC?
According to a highly-placed source, “In the NSEL crises, many leading brokers were involved in money laundering, misrepresenting facts, forgery and cheating with their clients. However, the FMC is silent on the role of the brokers.” In fact, NSEL trading clients such as Achal Agarwal, MotiDadlani and Ketan Shah have filed police complaints against some brokers.
Documents reveal that the FMC has put some brokers into the Monitoring and Auction Committee (MAC) appointed by the Bombay High Court in the NSEL crises to ascertain the dues payable by each defaulter and to recover them.
Market experts opine that the FMC’s inaction to act on the irregularities of the brokers has raised eyeb