Former NSEL MD takes blame, says he kept board in the dark

Anjani Sinha's affidavit says crisis was brewing for the past two years, accuses some colleagues of taking money

The NSEL payment crisis is taking a new turn with its former MD & CEO Anjani Sinha filing an affidavit with a local magistrate, taking the blame for the crisis and accusing his senior team for the mess. The  shocking part of the affidavit is that the crisis was brewing over the past two years when borrowers on the exchange were not able to pay and the exchange even allowed them to borrow more to pay interest and exchange fees.

Sinha said of the total outstanding of Rs 5,572.75 crore, Rs 1,201 crore was the amount borrowed by buyers to pay interest and other expenses so as to keep the circle moving and show that things were normal. The problem became acute as the business model of the exchange was worked out in a way that fund borrowers on the exchange were allowed to be used as a delivery centre. This means borrowers' factories were treated as warehouses and the exchange allowed them to borrow money and also keep stock.

Anjani said the entire mess happened under his management and accepted full responsibility for the issue “due to mismanagement, miscommunication and wrong deeds of senior management staff of NSEL”. He categorically said that the NSEL board was not responsible as, according to him, “he didn't inform the board about increasing exposure and risk of widespread default and breached the trust of the board members”.

These buyers had been diverting funds to other businesses including buying real estate but the business development team members didn’t bring that to the notice of the management. Sinha said, “They even did not inform about the non-availability of stock or pledging of stock with other lenders and simply allowed them (the borrowers) to siphon off funds.” 

According to the affidavit, the violation done by the warehouse team headed by the Jai Bahukhandi was the most severe one as they didn’t had physical control of stock against which money was borrowed and they made false stock statement.

Sinha also narrated specific wrong doings in case of Mohan India,  ARK Imports, Lotus Refineries, NK Protins, P D Agro, Namdhari, White water Foods, Metcore, Sankhya, MSR Foods etc.

Even the IBMA which is a subsidiary of NSEL was found on wrong hand and Anjani Sinha accepted responsibility for all that relieving the board of IBMA. One of the borrower LOIL paid Rs 20 crore to IBMA based on which the IBMA shown profit. IBMA was transacting not only on MCX but also on NSEL and MCX-SX as per the business model designed by him, admitted Anjani Sinha.