The Enforcement Directorate (ED) on Tuesday arrested former Mumbai Police Commissioner Sanjay Pandey in a money laundering case involving illegal snooping of National Stock Exchange employees during 2009-2017.
He was taken into custody following several hours of questioning by the federal agency on Monday and Tuesday in the matter.
Pandey is expected to be produced before a Special Court under the Prevention of Money Laundering Act (PMLA) for remand, an ED official told Business Standard.
“We are tracing Pandey’s and related entities’ assets derived from the ‘proceeds of crime’ while snooping on NSE employees,” the official said.
So far, about Rs 15 crore is under examination; it is the amount that Pandey allegedly received from the former NSE brass for ‘snooping’, he indicated.
The agency, it has been learnt, is examining transcripts of phone tapping which reflect price-sensitive information about companies, margins, trading data, etc, to ascertain whether they were leaked in collusion with brokers for monetary benefits.
The former Mumbai top cop has been facing investigations by both ED and Central Bureau of Investigation.
While is for alleged illegal interception of phones of NSE employees by iSec services, a company floated by him, the other is for violating the Securities and Exchange Board of India (Sebi) framework on systems audit.
The contract with iSec is learnt to have terminated in February 2017, within two months of Chitra Ramkrishna’s exit as chief executive officer (CEO). The new management came in July that year.
Chitra and former NSE CEO Ravi Narain were also booked last week by the ED in the case under the PMLA following alleged corruption charges levelled by the CBI.
On July 8, following the orders of the Ministry of Home Affairs (MHA), the Central Bureau of Investigation (CBI) registered a fresh case in the alleged NSE co-location scam that involves the phone tapping of NSE employees.
When iSec was set up, Pandey was not in the Indian Police Service; he quit as director in 2006. His mother and son are directors of the company.
iSec was one of the firms that had carried out audits at the NSE when the colocation case happened.
In an FIR, the CBI highlighted how 11 accused “entered into a criminal conspiracy” to “defraud and cheat” the NSE by way of submission of the system audit reports in violation of Sebi’s system audit framework, causing “wrongful gain to private parties and corresponding loss to the NSE”.
System audit certificates were bogus as they were issued without carrying out an actual audit.
Those were based on the input of a person who was not authorised to carry out such an audit, the CBI report said.
It has been argued that iSec was not appointed statutory auditor but for a special project.
The project was “Periodic study of cyber vulnerabilities” at the NSE, and the contract value was Rs 4.45 crore.
The company had conducted a security audit of the NSE around the time when alleged irregularities had taken place. Subsequently, it also audited systems of brokerages that have been under the scanner in the colo case.