Mumbai: The National Spot Exchange Limited (NSEL) on Tuesday said the Maharashtra Protection of Interest of Depositors (MPID) Court has directed the Economic Offences Wing (EOW) of Mumbai Police to probe the involvement of former Forward Markets Commission (FMC) Chairman Ramesh Abhishek in the Rs 5,600 crore NSEL crisis and submit its report within 40 days.
An application was filed by NSEL on a backdrop that the Mumbai EOW filed its final charge sheet in December 2022, but had not investigated the role of FMC and its then chairman Ramesh Abhishek in the NSEL payment default case.
In its recent order, the MPID Court asked the investigating officer to carry out a free and impartial investigation into the role of Ramesh Abhishek, the then Chairman of FMC during the period of offence.
Further, the investigating officer has been directed by the Special Court to submit its report as early as possible, preferably within 40 days from the order date without fail.
In its representation to the EOW in 2020, NSEL had highlighted several instances of negligence and failures on the part of Abhishek, which the agency did not investigate. "We are hopeful that the investigation into the role of Ex-FMC Chairman Ramesh Abhishek will be fair and impartial, and will unearth the motive behind the inactions," said NSEL Managing Director and CEO Neeraj Sharma.
The crisis was engineered by the ill-advice of FMC chairman to the Department of Consumer affairs (DCA) that NSEL had violated certain conditions of exemption granted to it under FCRA. This resulted in the DCA issuing Show Cause Notice (SCN) to the exchange in April 2012. Despite a detailed reply to the SCN and a subsequent follow up, there was no decision on the SCN until July 2013, when the exchange was abruptly told to stop functioning, resulting in the payment default crisis, the NSEL pointed out.
"Till date, the SCN remains unadjudicated. This goes to show that Abhishek's actions were fraudulent, mala fide, motivated and resulted in deliberately creating the crisis," it alleged.
According to the NSEL, "if the understanding of Abhishek on the tenure of contracts being in violation of exemption is considered as gospel truth, why there were no actions recommended to the DCA against N-Spot (subsidiary of NSE and competitor of NSEL) which had contracts beyond a period of 11 days. Favouritism to N-Spot and in turn NSE depicts nefarious intentions of Abhishek."
The NSEL noted that the August 4, 2013, meeting was an important event wherein the defaulters before the FMC, the Brokers, NSEL Board and some traders admitted their entire liability and committed to pay. This fact was further fortified by various media interviews given by Abhishek post the meeting. However, the minutes of the said meeting are stolen or intentionally misplaced/destroyed. This finding also forms part of the Serious Fraud Investigation Office (SFIO) in their report. On August 6, 2013, reiterating its stand, the government gave omnibus power to FMC and in turn Abhishek by way of Gazette Notification to solve and settle the crisis. However, none of the actions taken by Abhishek were towards resolving the crisis. In fact, his laidback attitude towards recovery resulted in siphoning off the monies by defaulters, making the recoveries from them difficult to repay the genuine claimants who are still awaiting for their legitimate dues even after nearly a decade. He failed to solve the crisis while it was solvable in 10 days back in 2013, the company said.
Despite the EOW-Mumbai report on wrong doings of brokers, NSEL said, Ramesh Abhishek chose not to act against brokers, whose role is now getting clear. The investigation into his role will now reveal what motivation or quid pro quo compelled the former IAS officer to refrain from taking any action against the accused brokers and to sit idle on recommendations of the EOW Mumbai against the brokers.
The NSEL alleged that Abhishek acted on the wishes of the brokers and recommended a forced merger of two private companies in so-called public interest to the government. The decision of merging two companies was overturned by the Supreme Court as there was "no public interest". In fact, the recommendation to merge two companies was termed as "non application of mind" by the apex court.
The NSEL stated that Ramesh Abhishek created, fuelled, and aggravated the NSEL crisis and did not solve it when it was solvable, thereby abdicating his regulatory duty leading to omissions of criminal nature on his part that caused wrongful loss to the investors and wrongful gains to the defaulters.
Notably, Abhishek, who retired as the Secretary at the Department for Promotion of Industry and Internal Trade in 2019, will now have to face the investigation and cannot take shelter of the merger of FMC with SEBI and his inability to attend the investigation which he had taken before SFIO. It is a trite law that no government servant is above law and cannot seek protection of "actions taken in good faith", until those actions are investigated under the lens of the investigation agency.
Earlier in 2019, 63 moons technologies limited had filed a criminal complaint with the CBI against bureaucrats Ramesh Abhishek and KP. Krishnan and former Finance Minister P. Chidambaram, alleging conspiracy against the FT Group.—IANS