A fortnight ago, the ED summoned Kotecha, a self-confessed admirer of Harshad Mehta, for enquiry under the Prevention of Money Laundering Act
Controversial stockbroker Nirmal Kotecha is now under the scanner of the Enforcement Directorate in connection with an investigation into money laundering. Mr Kotecha, who is currently barred from trading in the stock market by the Securities and Exchange Board of India (SEBI) in connection with investigation into the forgery, price manipulation and insider trading in Pyramid Saimira Theatre Ltd (PSTL). Mr Kotecha was the co-founder of PSTL.
Documents available with Moneylife show that Mr Kotecha had been summoned by the ED under the Prevention of Money-Laundering Act. The summons was issued by Rajeshwar Singh, deputy director of the ED, based in Delhi who directed Mr Kotecha to be present before him on 14th November 2011.
Interestingly, the case number quoted in the summons issued to Mr Kotecha is identical to that quoted in another Enforcement case information report (ECIR) dated 9 March 2010 in connection with the 2G scam (Unified Access Service License). The ECIR lists offences under Sec 120-B of the IPC and 12(2)r/w 13 (1) (d) of the PC Act and is against certain “private persons and companies”, without naming them.
Moneylife is in possession and have reviewed both of these documents.
The ED letter dated 21 October 2011 stated that it is conducting an investigating under the section 50(2) and Section 50(3) of the Prevention of Money-Laundering Act, 2002 and it requires the attendance of Mr Kotecha for the same.
It has asked him to submit his original passport with a photocopy, details of the properties (both –moveable and immoveable), bank accounts held by him and his family in and outside India; details of the firms/companies in which he or members of his family are proprietors/ partner/ director in and outside India and details of the foreign visits he made since January 2006.
According to market circles, Mr Kotecha is associated with Mavi Investment Fund Ltd, a sub-account for a Foreign Institutional Investor (FII) – MM Warburg Bank (Scheweiz) AG. Mavi Investment, which is registered in a tax haven, was among the few FII sub-accounts that has been banned by SEBI in September 2011 from dealing in securities or instrument with Indian securities until further orders. According to Bloomberg data, this fund holds stakes in as many as 49 companies amounting to $350 million in some large cap companies including Mundra, Adani and JSW. Blogs tracking Nirmal Kotecha’s activities claim that Mavi Investment has pooled funds from many Indian entities as well as diamond merchants.
Although he is under a SEBI ban, Mr Kotecha is constantly rumoured to be a big player in the Indian capital market even today, especially in hugely manipulated Initial Public Offerings.
Interestingly, in July this year, well after he was barred from the capital markets, Business World magazine named Mr Kotecha as second in the list of India’s non-promoter billionaires – next only to Rakesh Jhunjhunwala and his wife Rekha. The magazine put his net worth at Rs1,821 crore – although this may have shrunk given the state of the capital market. The magazine provided a long list of his investment.
According to report in India Today, an inquiry was initiated against KD Singh, a Trinamool Congress Rajya Sabha MP and close confidant of Mamata Banerjee, by the home ministry. The investigators were probing two FIIs- Mavi Investment and Somerset Emerging Opportunities Fund, which acquired stakes in Singh’s Alchemist Realty Ltd. Both of these funds were closely linked to Mr Kotecha, say market sources.
Mr Kotecha, a self-confessed admirer of the late scamster Harshad Mehta is only in his 30s and is the son of an LIC agent who also ran a medical shop in Kochi. He was also known to befriend journalists who also came under the regulator’s scanner for their involvement in the Pyramid Saimira case where a forged SEBI letter was leaked to the media. Incidentally, the forgery was traced to a SEBI manager who was also under Mr Kotecha’s influence.
Moneylife could not contact Mr Kotecha for his comments since his number available with us was unreachable. His reaction if any will be added to this report when available. Despite repeated attempts, Moneylife also did not get any further details about what transpired at the 14th November hearing of the ED as had been scheduled under the summons.
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