Companies & Sectors
Jignesh Shah Arrested in NSEL Scam
But there is no sign of investors getting their money back

It was the least known entity in the entire MCX group which saw meteoric growth over the past decade. Yet, on 8th May, it was the National Spot Exchange Limited (NSEL) and its Rs5,600-crore scam that probably drove the final nail in the financial market career of Jignesh Shah. Ironically, just eight days earlier, Mr Shah was back to his pugnacious ways, in the mistaken belief that he had “survived the tsunami of bad news.” 
 
The NSEL scam, in a nutshell, is about the Exchange running a long-term lending operation disguised as paired forward contracts, which were also illegal and, worse, were without collateral. When the music stopped, the borrowers, in most cases, have not been able to refund large chunks of the money, despite arrests, interrogation and threats.

Very quickly, investigations showed that his flagship bourse and businesses were not run very ethically either. In fact, it was these findings of a forensic audit by PriceWaterHouse (PWC) that Jignesh Shah was vociferously contesting in television interviews and newspaper advertisements. 
 
PWC’s report accuses him of involvement in illegal trading and racheting up trading volumes in his flagship—the Multi Commodity Exchange (MCX). The words were probably like a red rag before investors who had lost crores of rupees and the pressure to hold him accountable and arrest him, clearly followed. So 10 months after government action began, Jignesh Shah, its founder, was finally arrested. 
 
Unfortunately, government actions have no positive impact on the group. The entire MCX group is now being ‘professionally-managed’ under the direct oversight of two regulators and the finance ministry; yet, the unexplained top-level exits at the bourses cause concern. Why would MCX-SX chairman, GK Pillai, and MCX managing director, Manoj Vaish, resign so abruptly and mysteriously when they had the support of the government and regulators and were appointed to clean up the mess at MCX group?
 
Finally, what about the investors? From Harshad Mehta to Ketan Parekh, Dinesh Dalmia (DSQ Software) to Ramalinga Raju (Satyam), one factor in the India scam story has been constant—investors either don’t get their money back or get a pittance, decades later, when its value is half, or less, and they have spent a lot of money fighting legal battles. Recovery of money is meaningless for investors, if it stays locked up with a court/ regulator-appointed custodian. Here, too, investors have got back a few peanuts, but the big losers have seen no sign of  getting their money yet. 
 
(Note: Mr GK Pillai's designation has been corrected)

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COMMENTS

s sitaraman

3 years ago

In India, Robbers and dacoits and buccaneers,conmen and hoodwinkers all operate thro stock exchanges with the connivance of regulators-we need a person -tough and bold- like Preet Bhara in NW attorney's office to bring down to dust such criminals who swallow public's money and digest within no time!

Vaibhav Dhoka

3 years ago

CRB of Bhansali is in public memoirs.In India it is absolutely impossible to get investors money refunded.This is due to judicial and investigative incomepence and above all investors greed plays big role.

Southern industrial corridor makes some progress
The full cost of the Southern industrial corridor is estimated to be between Rs10,000 crore and Rs12,000 crore and would be shared by stakeholders

The Japanese International Cooperation Agency (JICA), in consultation with the Department of Industrial Policy and Promotion (DIPP), have made some progress, in identifying about 25 industrial projects, including ongoing and new, which would come up in the Southern Industrial Corridor, covering Tamil Nadu, Karnataka and Andhra Pradesh.
 
From the press reports, it appears that this meeting of the stakeholders, included members of the Japanese and Indian central goverrnment, representatives from the concerned state governments, port and Nartional Highway Authority of India (NHAI) officials, and officials of  leading Japanese companies like Yamaha, Toshiba and Mitsui.
 
The full cost of the project is estimated to be between Rs10 crore and Rs12,000 crore to shared by the concerned parties. More details will be available in due course.
 
This meeting was chaired by TKA Nair, Advisor to the Prime Minister. In this important meeting, the terms of reference has been finalised and an integrated master plan to cover the Chennai-Bangalore Industrial Corridor (CBIC) is expected to be submitted by March 2015. It appears that this is being developed in the lines of Delhi-Mumbai Industrial Corridor, and is expected to ease the congestion at Chennai and Kamarajar ports.
 
Plans include creation of industrial hubs in Krishnapatnam in Andhra Pradesh and Vasant Narsapur in Karnataka. In case of Tamil Nadu, as Hosur is reasonably well developed, chances are that the choice of site may fall on Ponneri as most Japanese companies are located in North Chennai.
 
Ambitious plans under this project include, proposed and ongoing projects in Chennai and Kamarajar ports, a dry port at Sriperumbudur, including a greenfield airport there. Hoskote to Dobaspet would be on four lane traffic. It will bring in improvement in road traffic from Mulbagal to Renigunta via Chitoor. Apart from these, a dedicated high freight corridor is planned including a Chennai-Bangalore expressway.
 
Press reports indicate that by early June, the final interim report No:2 will be submitted for further study.
 
This is an important development that needs expeditious approvals from higher authorities so that work progresses smoothly.
 
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)

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