The accused in the multi-crore payment scam in National Spot Exchange Limited (NSEL) purchased expensive vehicles, luxury villas and flats, expansive plots, shares in beach-side hotels and vast tracts of agricultural land through money laundering.
On 30 April, the Bombay High Court had asked the chairman of Forward Markets Commission (FMC) and director of Enforcement Directorate (ED) to appear before it on 7 May so that it could take decision about the liquidation of assets of the National Spot Exchange, which is embroiled in the Rs 5,600 crore scam. The court of Justice S A Kathawala will sit at an unusual time of 9.30 am on May 7 specially to hear the matter. The Judge had further asked officials of the Economic Offences Wing (EoW) and ED whether they had any objection if properties attached in the NSEL scam were sold and the proceeds deposited with the court. The issue cropped up in a case filed by Mohan India, an NSEL investor. The ED had that far attached 8 provisional orders of three NSEL borrowers, which are Mohan India, PD Agro Processors and Aastha Group. The EOW had attached 460 properties of borrowers in the NSEL scam.
In the court, the deputy director of ED had said the settlement would have to be done as per the Prevention of Money Laundering Act. The ED official had also contended that as the attached properties were considered as ‘proceeds of crime’, the properties were vested with the Union of India and cannot be sold. Justice S J Kathawala then directed the ED Director to appear on 7 May and give a clarification on the matter. He also asked the Chairman of FMC, Ramesh Abhishek, to be present. Three names were suggested by ED to head the committee set up to address the grievances of the investors. The ED also submitted to the High court, the recommendations on the powers and functions of the committee.
In the last few days, the ED has come up with these findings. A firm, Mohan India Pvt Ltd, and its subsidiary units laundered the funds of the stock exchange. “Generally, layering is the process through which the laundered money is channelised for its ultimate integration into the system. In this case, it is evident from the evidence gathered so far that the defendants (Mohan India and others) have attempted to layer the proceeds of crime generated through their criminal activities in various manner like purchase of high-end vehicles like Range Rovers, luxurious villa for their use which have no relation with their legitimate business activities,” the ED report reads.
The ED, a few months ago, had attached assets worth Rs 125 crore in the name of the firm and its other business associates under the provisions of the Prevention of Money Laundering Act (PMLA). The central probe agency has identified these assets to be the “proceeds of crime”.
Mohan India Pvt India is one of the largest defaulters of the scam with initial liability of Rs 922 crore; it owes Rs 600.08 crore, of which it has paid Rs 52.85 crore to the exchange. The ED probe found that while the Mohan India group of companies had “received funds in their settlement accounts from NSEL purportedly on account of sale of sugar…, they were eventually transferred to various individuals and entities and payments were made to car dealers, developers, construction firms etc by way of transfers, NEFT/RTGS payments/pay orders.”
NSEL had decided om January to liquidate Mohan India’s properties in Civil Lines in Delhi and Bikaner in Rajasthan. Besides, NSEL also wrote to the Income Tax Department in Delhi to release Rs59 crore from Mohan India as per the MPID court order on 8 January 2014.
The ED, in a voluminous report now, has furnished the documentary proof of the movement of all this money sourced from NSEL to the end purchase of real estate or cars by tracking bank transactions spread across various parts of the country. “Investigations under the PMLA have revealed that the defendants (Mohan India Pvt Ltd and others) were dealing in sale and re-purchase of sugar without having any physical stock of sugar. They had received funds from NSEL on account of sale of sugar which they have not delivered to NSEL at all.
There was no question of NSEL allowing them to invest these funds in real estate,” the probe report said. The agency has also recorded a number of statements of the officials of the NSEL and Mohan India Pvt Ltd under PMLA before preparing and submitting the first investigation report in this case to the court.
The ED said it attached luxury vehicles like a Toyota Fortuner, three Range Rovers, flats in Gomti Enclave in Lucknow, eight plots of land in Karnal in Haryana, a posh flat in Mumbai’s Borivali, plots in costly addresses like Mehrauli, Hauz Khas, Jor Bagh and Sainik Farms in Delhi and other such assets as “there was a likelihood of immediate sale or disposal of such high-end vehicles and luxurious properties (by the firm in question) and the non-attachment of the same would have frustrated the proceedings under the Act (PMLA).” “It was revealed that funds obtained from NSEL were diverted for the purposes other than the purpose for which they were obtained raising the suspicion that the said amounts were laundered by MS Mohan India group,” the ED said in its report.
The agency has also relied on a report of the I-T department against the firm that said that the “godowns which were declared to NSEL (by the firm) as designated warehouse had no capacity to store the quantity of sugar traded by them (Mohan India and others) on the NSEL platform.” The ED has said that its probe in this case is “still in infancy at this stage” and further investigation is on. The Rs 5,600-crore payment crisis at NSEL and the alleged scam is being probed by different agencies like the Mumbai Economic Offences Wing and the I-T department.
Rs 1,759 crore worth of properties and valuable assets have been seized by Enforcement Directorate (ED) in the last one year even as the anti-money laundering agency launched maximum number of prosecution for alleged violations during the same period. The agency carried out a total of 127 attachments during the same period freezing land properties, assets, flats, expensive SUVs and vehicles, fixed deposits, cash and jewellery of the accused in its cross-country actions under the stringent Prevention of Money Laundering Act (PMLA). [Agencies]