NSEL sacks MD Sinha; bourse payout fails. In another shocking move, the National Spot Exchange Ltd (NSEL) on Tuesday announced to remove CEO and MD Anjani Sinha and CFO Shashidhar Kotian subject to further investigation on a day when it failed to meet its first payout obligation. The commodity exchange also sacked six other top executives pending enquiry. NSEL said that it had appointed PR Ramesh as the ‘Officer on Special Duty’ who will conduct special investigation to identify laspses in operations and would report to the Board directly. Ramesh will also be able to exercise all power of CEO of the company. OSD will also have to suggest corrective actions for recovery of dues. On its first scheduled repayment NSEL could settle only Rs 92.13 crore out of the required of Rs 174.72 crore payment it had committed to the sector regulator Forward Market Commission (FMC). The NSEL had to shut down its operation early this month following the government direction in the wake of violation of certain rules. It has given seven-month plan to settle Rs 5,600 crore to investors. NSEL also appointed SGS, a collateral management firm to assess quality of goods in warehouse. It expects the SGS work to be over by end of the month. The bourse also plans to appoint a well-known global audit firm for forensic audit by Friday. It plans to legal and regulatory measures on non-compliance on warehouse collaterals. FMC is taking the default by the NSEL very seriously and has referred the matter to the Department Of Consumer Affairs. "We have taken the failure of NSEL to honor their settlement obligation very seriously. We have written to board of directors for their response but FMC is going to view such failure very seriously," Chairman Ramesh Abhishek said. While FMC is determind to tighten its grip, the government may pass on the control of commodity exchanges to Deparment of Consumer Affairs, sources said. Sources added that the decision on the same can be taken in a day or two in case of which the commodity market matters could be handed over to the finance ministry and would be removed from FMC purview. All six commodity exchanges not only NSEL could come under the purview of the finance ministry. Investors have also requested government that NSEL be taken over like Satyam . Motilal Oswal of Motilal Oswal opines that it was not enough to have stopped at the level of the managing director and chief executive officer (CEO) and heads of other departments. The NSEL board needs to answer some tough questions about the manner in which the exchange functioned. “A few employees have been made the scapegoat. The entire investor community feels betrayed and has lost confidence in the exchange mechanism set up by the Financial Technology Group.” Motilal Oswal adds that government should sack the whole NSEL board and investigate whether the board was a party to the fraud along with the borrowers. "So, I don’t think sacking few people will solve the problem." On the exchange defaulting its first payment obligation, Oswal says, "They are trying to fool the people and misled all in believing that things were under control. They knew the problem was serious but they never accepted the problem. We don’t know what is going to happen to the 15, 000 investors across the country. The board has to be made accountable for the whole thing."
Posted on: Wed, 21 Aug 2013 07:03:01 +0000
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