The Telegraph
Since 1st March, 1999
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CSE scam trail leads police to hawala maze

Calcutta, Oct. 7: There’s a new twist to the multi-crore securities scam that rocked Lyons’ Range a year-and-a-half ago. The Calcutta Police today said the defaulter-members of the Calcutta Stock Exchange had siphoned off funds through hawala channels.

Appearing before the chief metropolitan magistrate S. C. Mishra, public prosecutor Ashok Bakshi said: “The police have unearthed evidence of fund transfer through the hawala route. The police need to investigate the hawala links further, and hence must detain the eight arrested in police custody.”

The chief metropolitan magistrate remanded them in police custody, though they had been sent to the jail on Friday by another magistrate who felt there was no need for further detention in police custody. The police had described that order as a “major setback” to the investigation.

DC (DD-I) Soumen Mitra said the police had seized documents that indicated fund remittance through hawala, but refused to divulge the details “in the interest of investigation”.

“The documents in our possession indicate all the three defaulter groups — led by Harish Chandra Biyani, Dinesh Kumar Singhania and Ashok Kumar Poddar — might have transferred funds through illegitimate channels,” Mitra added.

The transactions might attract action by the Enforcement Directorate (ED) for violations of the Foreign Exchange Management Act (Fema), Mitra said. The police, however, will not refer the matter to the ED. “The ED can initiate action on its own if it wants to,” Mitra added.

It is understood that the arrest of Dinesh Jain, managing director of Srei Securities, led to the revelation of the hawala deals. The Srei management denied having any contacts with the defaulters, but admitted that it had engaged Singhania as a broker to buy shares.

Stockbrokers said Jain’s brothers were among the leading rukka-purja — private financing — and hawala agents in the city. The police said they were in the lookout for Jain’s brothers as well.

The Securities and Exchange Board of India (Sebi) has unearthed fund remittance by a number of foreign companies that traded on the Indian bourses through local brokers.

Former Stock Holding MD to be quizzed

The Calcutta Police will soon interrogate B.V. Goud, former managing director of Stock Holding Corporation Ltd (SHCIL) for the abuse of its ‘sell-n-cash’ scheme by Harish Chandra Biyani.

Sources in the police and SHCIL confirmed that Goud has been asked to depose before the police. He is expected to come to Calcutta tomorrow. The police have already interrogated the local manager of SHCIL, A. S. Bagchi, a number of times.

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