Chokshi & Chokshi has submitted its forensic audit report on NSEL e-series contract to the forwards market regulator. CNBC-TV18 learns that one among the key highlights of the report points to the fact that some larger investors redeemed their money before their E-Series contracts expired. For instance, Sahara Q Mart, a Sahara group company, had redeemed 100 kgs gold before the Sebi attachment order, while another company JP Associates had redeemed 1,000 kgs of silver. Sahara group’s transaction in this case is learnt to be under the Sebi scanner.
The report also pointed out that since no evidences were found with regard to supervisory functioning on e-series products, it indicates a failure of governance by the board of directors. The value of e-series bullion contracts is found to be around Rs 453 crore.
The forensic auditor also pointed out that 95 percent of trade on e-series platform was by IBMA, raising questions on the synergies between the two companies.
While NSEL did not disclose the volume of IBMA match trades in its daily trades to the public, the report said that IBMA acted as an unauthorised dealer without entering into a formal agreement with NSEL.
But bringing relief to investors, the report also pointed out that e-series redemption is expected to start soon. The report will now be submitted to the Bombay high court.
While NSEL also replied to Chokshi and Chokshi’s report saying that “based upon the review of information received from Custodian/ Depository / Exchange data, quantity of goods was found to be matching as per the reconciliation exercise carried out by auditors.”
According to the FMC terms of reference M/s Chokshi & Chokshi had to undertake a “verification of physical stocks lying with the custodian vis-à-vis the records of CDSL, NSDL and the Exchange.”
NSEL also pointed out that many of the issues raised in the audit report were actions taken solely under the direction of the erstwhile MD and CEO Mr Anjani Sinha and his team against whom criminal actions have been initiated.