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The PricewaterhouseCooper audit report on MCX has found some of the 912 related parties listed by both MCX and Finnancial Technologies have traded on the exchange’s platform and in few occasions, funds were transferred to the entities of related parties.
“Specified abnormal patterns have been noted in the trades performed by these entities. Regulators in India prohibit (in essence and spirit) trading by related parties or trades which demonstrate patterns on exchange platform,” it said.
The report said certain additional directors were involved directly or indirectly in the exchange as members, vendors or clients.
For instance, it said, Sunil Khairnar, was a director and additional director in some of the FT Group companies such as NSEL and NBHC. MCX paid Rs 17.43 crore to four business entities of Khairnar over the years on account of professional charges and donations. Of the total amount, Rs 11.35 crore was paid between September 2012 and February 2013.
The pay-outs do not appear to be adequately substantiated with nature or quantum of services rendered to MCX. This apart, a business entity of Khairnar was a member-client of MCX, it said.
The quantum of money paid by MCX to disclosed related parties, which were subject to the review was about Rs 709 crore, said the report.
The commercial terms and conditions agreed by MCX with related parties were not substantiated with any underlying market benchmarking or competitive bidding.
The report has also pointed out that MCX has paid Rs 55 crore to vendors either whose physical existence could not be established and therefore seen questionable or where transactions in whole or part with certain vendors appear questionable.
MCX also paid Rs 2.97 crore to two non-existing entities Tarana and Tejaswani who existed as clients at MCX and were also appointed as vendors. Besides, Mukesh Shah has acknowledged receipt of Rs 1.74-crore cheque in favour of Arunodaya Trust. However, the physical existence of the Trust could not be established, it said.
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