Expedite steps to recover Rs 600 cr from foreign gold buyers'

Rapping MSTC for its failure to recover about Rs 600 crore from foreign buyers of gold jewellery, a Parliamentary panel today asked the Centre to take legal cases to a "logical conclusion" for recovery of the amount.
The case, said the Jagdambika Pal-headed panel, pertained to 2008-09, a year after MSTC ventured into gems and gold jewellery exports. Its 46 foreign clients defaulted Rs 598.63 crore payments, citing economic slowdown as the main reason.
Of the 46 clients, 44 were from UAE, while the other two were from Kuwait and Singapore.
"Till date, out of 46 cases in all, MSTC has managed to secure decrees valued at Rs 672.30 crore in 43 cases in the UAE and also filed execution cases in respect of 12 defaulting buyers...Take all these cases to their logical conclusion to ensure the interest of the public exchequer," the Committee on Public Undertakings, said in its report tabled in Parliament.

Observing that the Committee's recommendations have expedited up things, the panel asked the Steel Ministry, the administrative Ministry for MSTC, to expedite steps to book the perpetrators of the crime.
"Investigation is in progress both by CBI and ED at their ends...In order to send the perpetrators of fraud behind the bars, it is necessary that the investigations should be brought to the logical conclusion at the earliest," the Committee said.

It also recommended that the Ministry "through constant monitoring and coordination with all agencies including diplomatic channels, ensure expeditious completion of the probe by the enforcement agencies so that the reality is brought to the fore and justice are served."

It also lashed out at MSTC for entering new business domains without adequate safeguards and proper due diligence.
"Before accepting the proposals for the export business of gold jewellery, MSTC Ltd did not carry out due diligence on its part in verifying the credentials of the associates and foreign buyers and relied on the due diligence made by insurers, i.E, Export Credit Guarantee Corporation of India and ICICI Lombard regarding the foreign buyers," it said.
It said due to such a step by MSTC "huge sums of public money has been locked up in legal battle."
MSTC, formerly known as Metal Scrap Trading Corporation, is primarily in to trading of metal scrap and of late, it has emerged as a major domestic e-commerce company, through its e-auction portal.

The total export outstanding was Rs 600 crore, against which Rs 475 crore or 80 per cent of the export value was paid by MSTC to its 6 associate suppliers and mandatory ECGC insurance was taken by the company. Part of the said exports were done through Standard Chartered Bank under Receivable Purchase Programme for which ICICI Lombard was the insurer.
MSTC has said it has initiated all measures within the law to recover the outstanding payments.