According to a preliminary report based on the forensic audit of Universal Commodity Exchange (UCX) by KPMG, Ketan Sheth, the exchange’s promoter, had siphoned funds and diverted these to group companies, sources in the Forward Markets Commission (FMC) have said.
On Wednesday, KPMG gave the preliminary report, as sought by the FMC. The final report will be given on Monday.
FMC sources say according to the preliminary report, UCX did not invite competitive bidding for technology or space for its operations, adding such contracts were given to benefit group companies.
When contacted, Ketan Sheth said, “I am not aware of anything”.
In September, the FMC had commissioned KPMG to conduct an audit of the exchange after it was said Sheth was allegedly siphoning money from the exchange. KPMG was tasked with carrying out a forensic investigation into “the serious charges and allegations of misappropriation of funds by the promoter of UCX since the inception of the exchange”, the FMC had said at that time.
This followed preliminary findings on gross financial irregularities and diversion of funds, on the basis of feedback from the exchange’s board of directors, it had added.
National Bank for Agriculture and Rural Development holds 16 per cent stake in UCX, IFFCO 15 per cent, IDBI Bank 10 per cent and Rural Electrification Corporation 16 per cent. Commex Technology, the promoter of the exchange, holds 40 per cent stake.
Trading on the exchange was suspended in July, 18 months after the exchange began operations.
After FMC had found an unusual increase in trading at UCX, it was feared the increase in volume was either fictitious or aimed at adjusting profit-and-loss transactions. In April, a notice was sent to the exchange, inquiring about the action taken regarding trading.