Kotak Mahindra stake buy in MCX under lens (Exclusive)

Tarun SharmaMoneycontrolThe Serious Fraud Investigations Office (SFIO) has written to Kotak Mahindra Bank seeking documents related to the bank’s acquisition of 15 percent stake in Multi Commodity Exchange in July 2014, sources told Moneycontrol.This is part of the SFIO’s investigation into the scam at the National Spot Exchange Limited (NSEL) in 2013, where investors in paired commodity contracts lost money after the borrowers defaulted on interest payment. Subsequent investigations showed that the borrowers had not deposited any commodities as collateral in warehouses, as required under the rules of NSEL.Financial Technologies India Limited (FTIL), the erstwhile parent company of NSEL, was also the promoter of MCX.SFIO has asked Kotak Mahindra Bank to submit the documents on due-diligence and valuation in the next 15 days.In July 2014, Kotak Bank had bought the stake for Rs 459 crore, or Rs 600 per share, a discount of 24 percent to the market price of Rs 783 at that time.Ten days before this deal, high networth individual Rakesh Jhunjhunwala had bought a two percent stake in MCX at Rs 664 a share.“SFIO wants to know the structure of deal and if the specific reason for MCX selling stake to Kotak Mahindra Bank at a discount,” the source said.Kotak Mahindra Bank did not respond to an e-mail questionnaire on the matter.Interestingly, the SFIO is the first of the investigative agencies probing the NSEL scam to seek details of MCX stake sale. The Economic Offences Wing, Enforcement Directorate and Central Bureau of Investigation have all been looking at various aspects of the scam.SFIO had already shot off notices to key brokerages seeking details of their books of account. SFIO is probing if some brokerages had advance knowledge of the defaults by borrowers.