Anjani Sinha, former MD, National Spot Exchange (NSEL), may have tried his best to absolve the exchange’s the board from any wrongdoing but a closer look at his affidavit reveals that even senior management members were pawns in the hands of the borrowers.
Fears of a widespread default as early as 2011-12 forced the NSEL management to concede buyers’ every demand, including designing contracts to suit their needs and rollover of positions fully aware there were no stocks and that any rollover would increase exposure by at least 20% every year.
According to Sinha, Mohan India wanted to use the NSEL “platform for T+2/T+25 contracts and also for the purpose of developing Delhi-based sugar contracts based on delivery”.
In May 2013, according to Sinha, NSEL realised that the “entire story is a farce” and that Mohan India “availed of funds through (NSEL) platform and invested in land.”
Even then, NSEL allowed Mohan India to raise funds to the extent of Rs 300-350 crore so that it could “repay the same amount by December 2013 along with a profit of around Rs 200 crore for NSEL SGF, which could be used towards settling the dues of Lotus Refineries who was defaulting since long.”
NSEL also allowed Jai Shrivastava, director of Mohan India, to hold two memberships in the name of Tavishi and Brinda Commodities and raise Rs 347 crore to buy land near Delhi farmers. While denying that he benefitted personally, Sinha says he did tell Shrivastava that if “he can bail us out of Lotus problem, I will be obliged.” According to the affidavit, Shrivastava gave Amit Mukherjee (head of business development at NSEL) Rs 35 crore, which was used to buy luxury cars like Bentley and Porsche.
In the case of Lotus Refineries which has an outstanding of nearly Rs 253 crore, Sinha said the entity “did a big fraud by manipulating his stock record and by issuing fake bills etc.” NSEL staffers Manish Pandey and Jai Bahukhandi – both were sacked on August 20 – played key roles in getting Lotus on NSEL.
“We were trapped in the rollover mechanism... we were forced to use margin deposits to declare pay outs. The problem was that if we declare Lotus as