Mumbai: The Enforcement Directorate (ED) has now started the probe into the Rs 5,600 crore scam at the National Spot Exchange Limited (NSEL) after it registered a case under the Prevention of Money Laundering Act (PMLA) to begin its parallel investigation. The Economic Offences Wing (EOW) of the Mumbai police had earlier arrested former vice-president Jay Bhaukhundi and another assistant VP Amit Mukherjee last week.
“We have registered an FIR under the PMLA to begin a preliminary enquiry (PE) into the scam and will probe potential money laundering that may have taken place in the scam. We suspect the money generated from the proceeds of the crime were siphoned off abroad to tax havens,” said an ED official requesting anonymity.
The scam primarily involved the non-movement of physical goods being traded in the Multi-Commodity Exchange (MCX). According to the rules, there has to be a corresponding movement in goods to and from the warehouses against money invested by investors and traders.
The EOW probe also revealed that the warehouses did not exist except on paper. Investigators have connected this irregularity to Bhaukhundi, whom they said took bribes from defaulting firms and did not conduct requisite verification of brokers and warehouses.
The fraud therefore snowballed into a payments crisis where NSEL owed around Rs 5,600 crore to around 150 members and brokers who in turn represented around 13,000 individual investors and client firms.