Economy Aug 24, 2013
BD Pawar, a trusted aide of Union Agriculture Minister Sharad Pawar, has resigned as director on the National Spot Exchange (NSEL) in the wake of the Rs 5, 500 crore payment crisis that has hit the commodities exchange.
Pawar told Firstpost in an interview in Pune that he submitted his resignation early this month but was not aware whether it had been accepted.
"I was a non-shareholder member and I went on the board in the interest of farmers. But when I found that in the name of farmers something else was happening, I decided to resign immediately," he said. Pawar said that he was invited on the board by the NSEL on account of his work on various government committees relating to agricultural marketing.
Established as a joint venture of Financial Technologies (India) Ltd. (FTIL) and National Agricultural Cooperative Marketing Federation of India (NAFED), the NSEL commenced trading operations in different commodities in October 2008. The NSEL's mission is to develop a common Indian market by setting up a nation-wide electronic spot market and to provide state of art trading, delivery, and settlement facilities in various commodities.
The NSEL was forced to suspend operations on July 31 after 24 members failed to clear liabilities of more than Rs. 5,500 crore. One of the major defaulters is NK Proteins, a firm run by the son-in-law of the NSEL chairman, Shankarlal Guru.
BD Pawar, who is identified as a trusted aide of Sharad Pawar, has served as a bureaucrat in the Maharashtra government, as Additional Commissioner and Special Registrar, Cooperative Societies and director of state agricultural marketing.
In Pune, he along with NSEL chairman Shankarlal Guru is serving as director on the board of the Centre for International Trade in Agriculture and Agro-based Industries (Cita) that was launched by Sharad Pawar in 2001 to lobby for the domestic agri-business industry.
Speaking to Firstpost, Pawar blamed the executives running the NSEL for the mismanagement, although he said it was for the investigators to pinpoint what had gone wrong and fix accountability and responsibility. "As far as the responsibility of the board is concerned, there are three issues - compliance with company law, which has been done. As far as the day-to-day operations are concerned, the board is not concerned- the executives were carrying on their duties. As far as compliance under the Companies Act is concerned, everything is fine," he said. The NSEL ex-director added that till the last financial year, the auditor's report was clean and did not indicate any irregularities.
"I was not aware of this scam and came to know of it only when I was informed by the government that our licence has been suspended. It was then that I decided to resign," he said.
Pawar said that he has resigned on moral grounds and could speak only for himself. "I cannot speak for other directors. For example, how can you expect Jignesh Shah to resign? He is the sole investor," he said about the co-promoter of the commodities exchange.
He was full of praise for the Forward Markets Commission (FMC) chairman Ramesh Abhikshek who he said had "acted very quickly and appropriately".
The managing director had told the board that warehouse receipts were in order and pre-dated cheques had been collected. So there was full compliance. What else can be done?" he asked.
According to Pawar the big question that needs to be answered in this scam is the money trail. "Where has the money gone? Where has the money come from? These are the issues for investigations," he said. Pawar said that the 24 firms that triggered the crisis are answerable.
The NSEL had good work, he said, especially in cotton and maize procurement and its work had been appreciated by the Gujarat Agricultural Marketing Board.
"The interests of the farmers have been hurt enormously. The board cannot be held responsible because no director had given directions or instructions. It is the executives who are entirely responsible as it is they who ran the operations," he said.
Pawar maintained that he was not active on the NSEL board at any point as his attention was focused on the Pune-based CITA. A section 25 (not-for-profit) firm of which Sharad Pawar is the founder and president emeritus, CITA was formed with the objective of updating the farming community, its associations and agro-based industries on the latest developments and trends in the World Trade Organisation (WTO) regime and ``to liaison with the government and other policymaking bodies in respect of agricultural policies and programmes with reference to WTO developments''. It is an initiative of the Yashwantrao Chavan Pratisthan, Mumbai.
CITA's governing council at the time of its establishment reflected the strong presence of businesspersons closely identified with Sharad Pawar such as Vijay Mallya, chairman, United Breweries, KM Goenka, then the chairman and managing director of the Baramati-based Dynamix Dairy, who was later an accused in the 2G scam and Anuradha Desai, chairperson of Venkateshwara Hatcheries, one of the earliest investors in the Lavasa Lake City project.
This body brings out a monthly for farmers in Marathi, Hindi and Kannada with BD Pawar as its chief editor.
Asked about the firms on which he is serving as director, Pawar said that he was not associated with Kunal Hotels as a director, whereas Koyna Infrastructure Pvt. Ltd. was set up as a consultancy to promote erection of cold storages in the country. "This business did not take off and I am in the process of closing this company," he said. About Adap Consultants Pvt. Ltd., Pawar said it was established to provide consultancy on agriculture-related issues.