ED arrests Jignesh Shah under anti-money laundering law

The probe agency will produce him tomorrow before Special PMLA court; seeks custody

The Enforcement Directorate (ED) on Tuesday arrested Financial Technologies India (FTIL) founder Jignesh Shah (pictured) under section 19 of the Prevention of Money Laundering Act (PMLA).

“He (Shah) is arrested for non-cooperation in the investigation. He will be produced before the Special PMLA court on Wednesday morning,” said a senior official of ED.

“We have found clear evidence of money laundering against the accused, including Shah, so we will seek his custody," added the ED official.

63 moons technologies (known as FTIL earlier) said: “We fail to understand why such a coercive step has been taken by the Enforcement Directorate when Mr Shah has been fully co-operating with the investigation and has been going every time he has been called, including today, especially when ED’s own complaint has failed to establish any money trail to either Mr Shah or 63 moons. We have full faith in the Indian judiciary and sincerely believe that truth will prevail.”

ED had prosecuted NSEL and 67 others in March last year under the PMLA over Rs 3,721.22 crore of money trail. 

On July 7, the PMLA court had directed all the 68 accused named in the chargesheet in the National Spot Exchange (NSEL) scam case to present before court on July 18.

To prosecute a person means to officially accuse someone of committing a crime in a court of law or to try to prove that a person accused of committing a crime is guilty of that crime.

ED has been demanding Shah's arrest for questioning. He was questioned on Tuesday for more than 10 hours before his arrest. 

Money laundering charges under the PMLA is a non-bailable offence.

The ED in its first chargesheet had explained the criminal conspiracy undertaken by the people at the helm and in the middle-rung of NSEL that led to the cheating of depositors and creation of ‘tainted’ assets.     

The ED registered a criminal case under PMLA in 2013 to probe the case along with the Economic Offences Wing (EOW) of Mumbai police. The probe agency has so far made an attachment of Rs 600 crore in the case.

Shah was arrested by the EOW and released on bail in August 2014. He resigned as the managing director of FTIL and become its chairman emeritus.

The ED's huge attachment came from NK Proteins, one of the largest defaulters, whose liabilities on the exchange are estimated at Rs 900 crore.

The agency has also attached the assets of Mohan India worth Rs 125 crore, another big defaulter in the scam with initial liability of Rs 922 crore.

Among other defaulters that faced the authorities’ wrath are Spincot Textile and PD Agro Processor, with attached assets worth Rs 84 crore and Rs 50 crore, respectively.

The matter came into light on July 31, 2013, when NSEL failed to pay its 13,000 investors in commodity pair contracts. Due to this, investors lost nearly Rs 5,600 crore as it was found that NSEL had neither the money nor the stock to pay them back. This followed the consumer affairs ministry directive not to issue fresh contracts that cross the 11-day timeline. These contracts were in violation of the norms. There were 24 members who defaulted on payment to NSEL investors.