Enforcement Directorate Arrests FTIL Founder Jignesh Shah in Money Laundering Scam

Jignesh Shah. Credit: PTI

Jignesh Shah. Credit: PTI

Mumbai: The enforcement directorate (ED) today arrested Financial Technologies India Ltd (FTIL) founder Jignesh Shah in connection with its probe into the Rs 5,600 crore National Spot Exchange Limited (NSEL) money laundering scam.

Officials said Shah was arrested after being questioned by the investigating officer of the case, under the provisions of the Prevention of Money Laundering Act (PMLA) as “he was not cooperating in the investigation”.

“Shah will be produced in a special anti-money laundering court here tomorrow,” an official added.

Shah was also named in the first charge sheet filed by the ED in this case last year.

Reacting to the development, FTIL said in a statement, “We fail to understand why such a coercive step was taken by the ED when Shah has been fully cooperating with the investigation.”

FTIL officials said the central probe agency, at a recent review meeting, had informed the finance ministry that it was preparing to initiate fresh action for the attachment of assets against the accused and would also question a number of them based on inputs gathered by its investigators till now.

The agency had filed a 20,000-page charge sheet against the NSEL and 67 others in a Mumbai court in March last year, explaining the NSEL funds were laundered and “illegally ploughed into purchase of private properties”. The charge sheet gave the details of a money trail amounting to Rs 3,721.22 crore.

The ED had registered a criminal case under the PMLA in 2013 to probe the case, along with the Economic Offences Wing of the Mumbai police.

After a high-level meeting last month, chaired by economic affairs secretary Shaktikanta Das, the Centre also directed the Maharashtra government to expedite the resolution of the case by quickly auctioning assets worth Rs 6,116 crore attached so far and refund investors as soon as possible.

The NSEL’s payment troubles started after it was ordered by regulator Forward Markets Commission in July 2013 to suspend spot trade in most of its contracts due to suspected trading violations.

The exchange could not settle the outstanding trades, sparking investigations by the police and regulators to find out whether it had defrauded traders by not enforcing the rules that require sufficient collateral to be set aside.

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