NSEL crisis: EOW arrests chief of Lotus Refineries

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Financial Technologies, which owns crisis-ridden National Spot Exchange, holds 26 per cent stake in Multi Commodity Exchange of India Ltd (MCX). Financial Technologies, which owns crisis-ridden National Spot Exchange, holds 26 per cent stake in Multi Commodity Exchange of India Ltd (MCX).
SummaryLotus Refineries chief is alleged to have defaulted on Rs 159 crore that he borrowed from the NSEL

The Economic Offences Wing (EOW) of the Mumbai Crime Branch on Monday arrested Arun Kumar Sharma, director of Lotus Refineries, who has also invested around Rs 15-20 crore in Ram Gopal Verma’s upcoming movie Satya 2, in connection with the National Spot Exchange Limited (NSEL) settlement crisis.

Sharma is alleged to have defaulted on Rs 159 crore that he borrowed from the National Spot Exchange Limited and then splurged it on real estate and other purposes, EOW officials said. He was first taken in for questioning on Monday afternoon in connection with the amount that he has allegedly defaulted on and was placed under arrest later. He will be produced in the Esplanade Court on Tuesday, where the EOW will seek his custody for further interrogation.

“A prima facie examination of his books of account also shows that he has splurged the money in real estate and purposes like decorating his office. The furniture in his office alone was bought for Rs 10 crore, while he has also invested around Rs 15 to 20 crore in Satya 2, and some more money in another upcoming movie,” said a senior EOW official.

“The NSEL has claimed that Sharma has an outstanding amount of Rs 159 crore, which Sharma has disputed, saying that people within the NSEL used his account for trading worth a huge amount of money. However, the transactions were made using his own login id and password and it is very difficult for just anyone to operate his account the way he has claimed,” said a senior EOW official.

The officer added that amounts ranging from Rs 4 lakh to Rs 50 lakh have been shown as advance payments to various parties, but there is no entry of either goods or services received in return for the money. “No businessman would be careless enough to make advance payments that run into crores of rupees. The money trail clearly shows the money coming to him from the NSEL and going into so-called advance payments, investment in real estate and spending for personal purposes. He has also invested the money in various bank accounts. The very purpose was to splurge money in non-productive areas, which show that he had no intention of returning the money,” said the officer.

Meanwhile, former managing director of MCX Stock Exchange, Joseph Massey, was also questioned by the EOW on Monday.

Multi Commodity Exchange of India Ltd

Officials said that he was quizzed in connection with the discrepancies in the minutes of the NSEL’s board meetings.

“We have found that Massey was not even in Mumbai when some board meetings were conducted, and still his signature was seen on minutes of the meetings,” said an officer.

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