Lok Sabha Question No. 191 (STARRED), answered on 2016-07-29
Subject: Forensic Audit of Brokers
Ministry: FINANCE
Asked by: RAJESH RANJAN  (PAPPU  YADAV)

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHIA STARRED) QUESTION No. *191

## FORENSIC AUIIT OF BROKERS

- *191: SHIRI RAJESH RANJAN Will thc Ministcr of FINANCE be pleased to state:
- (a) whether a National Spot Exchange Limitcd (NSEL) rcsulting in loss of revenue to the Govcrnment during the last two years;
- (b)
- (c) whether thc Govcrnmcnt has ordercd a Forensic Audit of the brokers by Sccuritics and Exchangc Board of India (SEBI) and if so, the dctails thereof; and
- (d) whethcr therc has bccn a Forcnsic Audit done carlier by the Economic Offcnce (EOW), a third   party for which payments are   slill withheld steps lakcn in this rcgard? Wing

## ANSWER

MINISTER OF FINANCE (SHRI ARUN JAITLEY)

- (a) to (d): A statcment is placcd on thc Table of thc House.

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STATEMENT REFERRED TO IN REPLY T0 LOK SABHIA STARRED) QUESTTON NO. *191 RAISEI) BY SHRI RAJESII RANJAN, MEMBER OF PARLIAMENT IUE FOR REPLY ON JULY, 2016 REGARDING "FORENSIC AUDIT OF BROKERS" .

- (a) to (d): (EoW), Mumbai Policc is investigating into 4 case rcgistercd on 30.09.2013 vidc EOW CR No.89/13 under scctions 120 (B3), 409,405, 467 , 468, 471, 474, 4774 of thc Indian Penal Code in the mattcr of the payment crisis case of National Spot Exchange Limited (NSEL) The case was registercd against the Directors and managcrial personnel ol NSEL, Financial   Tcchnologies   (India) Limitcd (FTIL), borrowers, brokcrs and others for committing fraud of Rs. 5,600 crores approximately, thercby   duping invcstors. Subsequently, during thc coursc of" the investigalion, provisions of Thc Maharashtra Protection of Interest ol Depositors (In Financial Establishmcnts) Acl, [999 (MPID Act) were also invokcd to further strengthen Based on thc alorcmcntioncd FIR filed by EoW, Mumbai   Police, Directoratc too   rcgistcrcd a casc against NSEL and othcrs Prevention of Money Laundcring Act; 2002 (PMLA) on 14.10.2013. Wing kcy

The stalus of action taken various issues relating to NSEL paymcnt crisis is periodically reviewcd by thc Govcrnmenl The status with   regard to somc of' the

- (i) ffairs (MCA), inter alia, includes (a) issuing Order on 12.2.2016, mcrging NSEL with FTL (which is prescntly undcr a Slay order of the Hon'ble High Court of Bombay), and (b) thc Company Petition No. of 2015 bcfore the Hon'ble Company Law Board (now the Hon'ble National Company Law Tribunal) for   disqualifying the Directors of thc carlicr and thc cxisting Boards of FTIL and for appoinlment of Govcrnment Nominces thcrcon, The actions taken by MCA in respcct of FTI / NSEL await judicial decision pronouncemcnl: filing
- (ii) Thc Govcrnmcnt of Maharashtra has becn requested to strengthen thc dcploy compctent authorities' for   dealing   exclusivcly with rclatcd work; and approve pancl of evaluators and auctioncers l0 (acilitale carly auction ol allachcd properties. Till now, live Gazettc   notifications havc bccn issued in rcspcct of attachment of assets worth Rs. 6115.25 Crores approximalcly. attachcd with a vicw t0 rclunding the amounts (o (he invcstors.
- (iii) Thc Dircctoralc of Enforccment (ED) has filed a proscculion complaint bcforc the PMLA Courl, Mumbai against NSEL and 67 othcrs on 30.3.2015. Furthcr investigations arc in progrcss.
- (iv) Central Burcau ol Invcstigation registered a case each against thc NSEL and Mls Projccts and Equipment Corporation of India and NSEL and Metals and Mincrals Trading Corporalion of India Limited on 12.2.2014 and [8.6.2014, rcspcctivcly. Ltd,,
- (v Sccurilics and Exchangc Board of India (SEBI) has appoinlcd auditors lo rcports rclating to thcsc brokcrs.

As informed by EoW, Mumbai Policc, the Governmcnt of Maharashtra had appointcd two Forensic Auditors by issuing nolification dated 28.09.2015. These auditors initially rendcred thcir assislancc t0 EoW, Mumbai Police in the investigation. Howcver. duc to pending issuc of rcmuncration, audit work. A proposal disburse their rcmuncration from thc auction proceeds in this case has been submitted by EoW , Mumbai Policc (or dccision in thc MPID Court. thcy