The businessman’s house at Banjara Hills in Hyderabad on Friday. (PTI)

Mumbai, March 9: The Enforcement Directorate has reportedly sought from the stock market watchdog details of companies linked to the Pune-based businessman at the centre of an unaccounted cash scandal.

But the government chose to keep quiet, perhaps fearing an adverse impact on the already turbulent stock markets.

The directorate’s query to the Securities and Exchange Board of India is being seen as an indication that the money laundered could have been funnelled into stock exchanges.

Sebi officials refused to confirm or deny the letter. “Whenever income tax or ED conduct raids, they send reports to all agencies, including Sebi. It is routine,” an official said.

Since any investigation into the stock market is sensitive, investigators were asked to go slow to ensure there was no panic among investors, another official said without revealing the source of the instructions.

The letter to Sebi comes against the backdrop of warnings from national security adviser M.K. Narayanan that terror outfits could be diverting money into stock markets.

The amounts doing the rounds range from Rs 20,000 crore to Rs 36,000 crore. In public, officials scoffed at the figures. But in private, some said the amount was arrived at on the basis of a scrap of paper mentioning bank accounts in Switzerland containing $8 billion (Rs 36,000 crore).

Another group of tax officials said $8 billion could be a gross figure of all transactions and not the amount actually stashed away in the Swiss bank accounts.

In the absence of an unequivocal statement from the government, it was a free-for-all with theories linking as many as 28 politicians, several industrialists and some Bollywood personalities to the Pune businessman.

Officials who preferred to remain anonymous insisted that the trail could snake through places such as Pune, Mumbai, Calcutta and Hyderabad.

Investigators gave the routine explanation that the businessman served as a front for politicians and corporate leaders, helping them in parking black money in tax havens like Mauritius, Seychelles, and Cyprus. But they did not say why no action is being taken if they have identified the culprits.

The investigators suspect the money could have been routed back to India through participatory notes. Participatory notes are financial instruments that foreign institutional investors (FIIs) use to invest on behalf of overseas clients in Indian markets.

There have been concerns that such notes make it difficult for regulators to keep track, besides giving the client a degree of anonymity.

The issue figured in Parliament today but no minister made any statement.

A.K. Sinha, a spokesman for the Central Board of Direct Taxes, later denied reports that the unaccounted wealth was over Rs 32,000 crore.

“There is no question of any political party or politician’s name coming up in the investigations so far. It is a flight of imagination,” he added.