NSEL case: ED calls 5 FTIL board members for questioning

The Enforcement Directorate (ED) has summoned five present and former board members of Financial Technologies India (FTIL) for questioning in connection with the National Spot Exchange (NSEL) money laundering case.

The ED has asked them to appear before it within a week. The members of the board called for interrogation are chairman, managing director and chief executive officer of FTIL. The list also includes independent directors.

“We are probing foreign investments made by the FTIL,” said an ED official.

“We are examining the money trail and appropriate action would be taken,” added the officer.

An email sent to FTIL did not elicit any response.

Sources in the ED said the agency was considering the option of seizing assets under Prevention of Money Laundering Act.

Recently, FTIL assets worth ~2,000 crore, including FT Tower, its headquarters in Mumbai and other properties and bank deposits were secured by the Economic Offences Wing of the Mumbai police.

Meanwhile, the Bombay High Court on Monday told FTIL to file a reply in four weeks to the Centre’s response on NSEL’s merger with it. The court will commence a final hearing in four weeks. The merger was directed by the government and opposed by FTIL.

It is the first time such powers have been invoked by the government for private companies and in its response to the court has explained why it invoked Article 396 of the Companies Act, which empowers it to order such a merger.

At Monday’s hearing, the two-judge bench of V M Kanade and Anoop V Mehta held that the reply, filed by the ministry of corporate affairs (MCA), needed to be studied by FTIL.

“Article 396 was never invoked for a private company so far. This was exercised only for government companies so far, that also after obtaining 100 per cent shareholders’ nod of the target company (FTIL in this case),” argued FTIL counsel Janak Dwarkadas.

On February 12 this year, MCA had issued the order, saying this was done to recover money from cash-rich FTIL, as it was responsible for the payment crisis at NSEL. The crisis led to ~5,600 crore of payment default in July 2013, involving 23 borrowers.