Home NEWS Investigation MMTC 250 Crore scam: how tainted officers are being rewarded

MMTC 250 Crore scam: how tainted officers are being rewarded

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D-S-Dhesi-Chief-Secretary-Haryana

There is a clear-cut provision in the Indian law that no one should enjoy the fruits of a crime alleged to have been committed by him, how then could DS Dhesi former CMD of MMTC be allowed to rule as Chief Secretary of Haryana till he is cleared of Rs 250 Crore scam during his tenure.

In what is a closely guarded secret three officials of MMTC Limited –India’s single largest public sector trading house flouted all norms and used public money to participate in speculative gambling at the now defunct Jignesh Shah-promoted National Spot Exchange Limited NSEL involved in financial irregularities and Rs 5,600 crore fraud to dupe some 13,000 investors.

Two of the said officers Anand Trivedi and MG Gupta were allegedly known to Jignesh Shah and extended undue favors to Shah without proper verification of warehouse receipts, collateral security or physical delivery of goods traded. All this happened when Deepinder Singh Dhesi, IAS, was the CMD of MMTC. Instead of objecting to the financial irregularities Dhesi who was the Chairman and the two officers who were among the five functional Directors threw all caution to the wind and usurped the powers of the Functional management committee of Directors to endorsed their decisions. Even to the extent that when the Associate Finance Surjeet Singh objected to the irregularities in the NSEL trading, he was overruled by the FMCOD headed by Dhesi and others in its 88th meeting held on 14 June 2013.

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Finally the trading on NSEL was approved by the Functional Management Committee of Directors (FMCOD) without taking the approval of the Board of Directors of MMTC as required under the MMTC’s Delegation of powers (DOP). MMTC GM (Precious Metals) N Balaji and GM (F&A) T Kumaran signed the application for NSEL membership on behalf of MMTC.

It may be recalled that the central government granted a license to NSEL in June 2007 only to operate as a spot trading platform. The NSEL is not a recognized forward contract exchange like MCX. But, as a shady package deal, traders were allegedly allowed to take positions in NSEL and sell the same on MCX — which is not the same thing.  Also, it was operating T+25 contracts right from the beginning and pairing trade of T+2 and T+25 or T+2 and T+35 — even though contracts more-than-11-days are illegal. There was a time when most of NSEL’s revenue comes from forward contracts, for which it had no mandate.

NSEL continued to operating in a regulatory vacuum without any controls from 2007 till February 2012. To undo the damage, the Department of Consumer Affairs issued a notification on February 6, 2012, appointing the FMC as the designated regulatory agency for the National Spot Exchange. But it was too late in the day and the damage was already done.  The National Spot Exchange Limited (NSEL) finally suspended trading of all one-day contracts on July 31, 2013 triggering an Rs.55 billion payment crisis.

MMTC lost nearly Rs 251 crore due to speculative trading on the NSEL platform without any counter guarantee or physical delivery when the bubble burst. Out of this Rs 226 was reported in MMTC’s quarterly results ending 30 June 2013 and Rs 25 crore was VAT.

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This is the amount of loss to MMTC that it may have to write off in its P/L account as the defunct NSEL is not in a position to pay.

It all seems strange how MMTC chose such shady companies to channelize money to NSEL. That too without any collateral guarantee as per the instructions of the finance division.

Significantly some of the buyers and sellers to MMTC were the same. Two buyers of MMTC- Mohan India and Yathuri Associates have been declared as defaulters by NSEL. Mohan India and its group companies, Tavishi Enterprises Pvt. Ltd. and Brinda Commodity Pvt. Ltd, are the biggest defaulters in the NSEL Scam and owes the investors about Rs. 922 crores.

Likewise Gagan Suri, through his company Yathuri Associates, allegedly received Rs361 crore from NSEL funds and diverted the money to a maze of companies. Suri, along with his brother-in-law Onkar Anand, had allegedly formed several fake companies and the funds received from NSEL were routed through these companies. Suri allegedly formed Yathuri Associates for routing NSEL finances to Anand’s group companies.

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Similarly Mangla Shree Properties, a real estate company floated in 1999 owes Rs 720 crore to NSEL through Mohan India for 200,000 tonnes of sugar it supposedly bought from the exchange. Its DVAT registration license was cancelled.

An interesting twist in the story is that even though there is a clear-cut provision in the Indian law that no one should continue to enjoy the fruits of the crime, alleged to have been committed by him, instead of being made accountable all the guilty officers seem to be enjoying the fruits of their crime.  

The Supreme Court in the State of Gujarat vs. Mohanlal Jitamalji Porwal and Anr. AIR 1987 SC 1321, observed, “The entire Community is aggrieved if the economic offenders who ruin the economy of the State are not brought to book.” Again in the Ram Narain Popli vs. CBI, 2003 (3) SCC 641, the apex Court observed, “In the last few years, the country has seen an alarming rise in white-collar crimes which has affected the fiber of the country’s economic structure. These cases are nothing but private gain at the cost of the public, and lead to economic disaster.”

Possibly the rule of law does not apply to MMTC Limited –India’s single largest public sector trading house and one of the highest foreign exchange earner having a turnover of US$ 10 billion. No wonder they say there are two sets of law – one for the common man and another for the rich and influential.

A poor rickshaw puller accused of a petty theft may spend months in jail without a bail but three politically connected senior MMTC officials who caused a loss of over Rs 250 Crore to the public exchequer continue to hold sensitive posts without even a blot in their ACR. One of them former MMTC managing director D.S. Dhesi a 1982-batch Haryana cadre, IAS has been promoted as chief secretary of Haryana. Dhesi who still had nearly four years of service left, took over from P.K. Gupta as Haryana chief secretary on Dec 1, 2014.

Anand Trivedi, Director (Marketing), MMTC
Anand Trivedi, Director (Marketing), MMTC

Anand Trivedi, a former Chief General Manager, MMTC has been holding charge of Director (Marketing), w.e.f. July 3, 2012. Similarly Madan Gopal Gupta a former chief general manager, MMTC (west zone) is not only Director Finance but also managed to get his son Vineet Gupta employed in NSEL’s business development unit in Chandigarh in 2012.

Interestingly MG Gupta was appointed Director (Finance) on 9 December 2011 on probation. Likewise Anand Trivedi was appointed Director on 3 July 2012 on probation. Though the NSEL fraud came to light in July 2013 no adverse action was taken against the officials, instead Anand Trivedi’s appointment as Director was confirmed on 5 August 2013.

MG Gupta, Director (Finance), MMTC
MG Gupta, Director (Finance), MMTC

Significantly MG Gupta had caused a loss of Rs 10 Crore to MMTC by ordering import of 11,000 MT of coal from the foreign supplier at a high price on behalf of M/s Suchetan Exports. Inspite of this he was appointed Director (Finance) at MMTC’s AGM on 30 September 2013.

Madan Gopal Gupta’s involvement with the National Spot Exchange Ltd (NSEL) date back to 2009, Gupta, when as the chief general manager of MMTC (west zone), he wrote, “We are happy to launch a black matpe MMTC contract on the National Spot Exchange platform. Using this platform has helped us achieve better price realization than the physical tender system. This will help MMTC realise the most optimal price for black matpe at any point of time. We look forward to using National Spot Exchange for various other commodities in the near future.”

Gupta managed to get his son Vineet Gupta employed by NSEL and himself went on to become one of the five functional directors of the public sector trading major with a turnover of $10 billion.   

According to MMTC’s 2013 annual report “the company’s domestic trading, including trade on the spot commodity exchange of agro products, was valued at Rs 1,604.11 crore”.

One of the first public sector enterprise, accorded the status of “five star export house”, MMTC is one of the world’s largest buyer of fertilizers, India’s leading exporter of minerals, single largest bullion trader in the Indian subcontinent and the biggest importer of nonferrous metals & industrial raw material. It is also the leading Indian bulk exporters and importers of agro products and commodities like rice, wheat, wheat flour, soya meal, pulses, sugar, processed foods, edible oils and plantation products like tea, coffee, jute etc.

Clause 2.2 e of MMTC’s accounting policy clearly states, “Purchase/sale is booked in respect of trade done through a commodity exchange like National Spot Exchange, which is backed by physical delivery of goods.”

One fails to understand why this laid out policy to take physical delivery of commodities was not put into practice.

Also why hasn’t MMTC filed a formal complaint against NSEL or reported the financial loss to the Central Bureau of Investigation (CBI)? Above all why the guilty officers still being allowed to hold sensitive positions where they might be in a position to inflict further loss to the organization or tamper with past records?   

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Neeraj Mahajanhttps://n2erajmahajan.wordpress.com/
Neeraj Mahajan is a hard-core, creative and dynamic media professional with over 35 years of proven competence and 360 degree experience in print, electronic, web and mobile journalism. He is an eminent investigative journalist, out of the box thinker, and a hard-core reporter who is always hungry for facts. Neeraj has worked in all kinds of daily/weekly/broadsheet/tabloid newspapers, magazines and television channels like Star TV, BBC, Patriot, Sunday Observer, Sunday Mail, Network Magazine, Verdict, and Gfiles Magazine.

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