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Commentary

NSEL Executives Borrowed from Defaulting Companies

ET notes that NSEL top executives Amit Mukherjee and Kalpesh Shah have “dealings” with one of the biggest defaulters in the NSEL crisis, Mohan India.

Crores of rupees, it seems, has been transferred from Mohan India’s account to that of a Ram Awadh Sharma, a driver in the company. A posh flat in Gurgaon was also bought in his name!

Mukherjee’s wife maintains that they borrowed only for an emergency:

"We borrowed from Mohan India as we badly needed money for a medical emergency in the family. I admit that it wasn’t an appropriate thing to do. But we were going through a crisis…. Today my husband is being made a scapegoat for what happened in NSEL," Bonhi Mukherjee told ET over the phone.

Mukherjee was sacked on August 20 by NSEL.

The fourth payout – which should have been of Rs. 174 cr. – was just Rs. 13 cr. in total. This takes the total amount paid out to Rs. 128 cr. – apart from another Rs. 177 cr. paid out to small investors.

This is ludicrous. The exchange defaulted first on August 1. It’s now mid-September, and more than 5,000 cr., or 90% of the amount outstanding, has still to be paid. And, the exchange management still survives and is allowed to run other exchanges.

In fact, Financial Technologies (the promoter of NSEL) decided to ask for approval to raise Rs. 1000 crores as an equity institutional placement (see point 9). The stock was up 30% in the day.

It’s a wonder these things happen, and still, people continue to invest in markets.