Former bureaucrat Venkat R Chary, who headed Multi-Commodity Exchange of India (MCX) as non-executive chairman for about a decade, says he is disgusted with the motivated media campaign being run by "political, corporate and bureaucratic" vested interests against his long-term friend, Jignesh Shah. He added he was worried this would affect the confidence of young entrepreneurs "coming together to put things together".
In the first media interaction following the National Spot Exchange (NSEL) payment crisis and his stepping down from MCX in August, Chary emphatically defended Shah. He said he was confident Shah would overcome the crisis. Chary's comments came a day after the Forward Markets Commission (FMC)'s order against Shah declared he wasn't "fit and proper" to run exchanges in India.
Speaking to Business Standard over the phone, Chary, 73, said, "I am very clear on this. Enemies of Jignesh Shah have been carrying on this campaign. They have been doing it systematically. An order on fit-and-proper status has been passed (by FMC). If you remember, the fit-and-proper (case) was urged in MCX-SX (MCX Stock Exchange) case by Sebi. The same thing is happening now. This has been going on for 10 years."
He added the case was dismissed by the Bombay high court. "Sebi had to finally give them a licence, after the courts ruled against it."
According to Chary, Shah's "corporate rivals" are unable to digest the high market share of Shah's exchanges such as MCX and Indian Energy Exchange. "What they were unable to achieve in the market, they are trying to do through these campaigns," Chary said. He recalled how, six years ago, "they organised a raid on MCX. It was unprecedented. They even raided Jignesh's house. But nothing came out of that." He claimed an officer involved in the raid had confessed to him "we had to do it because orders came from above". According to Chary, all these efforts were aimed at proving Shah was not "fit and proper" and to remove him from the exchange space.
On the NSEL crisis, Chary says, "I wouldn't know much about it, as I was not directly involved in it. But what happened in NSEL was unfortunate. It was a fraud done by the MD & CEO, and he is already in jail for it. But the whole campaign is targeted at MCX, which has reserves of about Rs 1,500 crore and FTIL (Financial Technologies, the promoter of NSEL), which also has similar reserves."
When asked about the irregularities in MCX's functioning such as trades by a related party, the Indian Bullion Markets Association (Ibma), Chary said, "Merely doing trading is not a crime. It was not a member, it was a client. There were 2,000 members. How is an MD supposed to know what the members were doing?"
NSEL had a stake of 60 per cent in IBMA. The spot exchange, in turn, was owned by Financial Technologies, the promoter of MCX, making it a related party. Did it help boost volumes on MCX and push up its market share? "This is the propaganda of enemies. You cannot say Ibma boosted the market share of MCX. MCX's market share has been above 80 per cent for years now," Chary said.
Chary, a retired Indian Administrative Service (IAS) officer, has served as chief secretary, principal secretary and secretary in various departments of the central and state governments. He also served as chairman, FMC. A practising lawyer in the Bombay high court, he served on the MCX board from September 6, 2003, to August 30, 2013. On October 11 this year, he was appointed an independent, non-executive director of Financial Technologies (India) Ltd.
"I had been associated with MCX for 10 years, till August. As one of the first IAS officers to be appointed chairman of FMC, I have seen the whole game, both as a regulator and as a government functionary. What I told you was my feeling of disgust over the entire thing. No investor will ever come forward to put money in the country," he concluded.