Crash in Shares Linked to Dubai-based Hawala Operator Hari Shankar Tibrewala
Moneylife Digital Team 15 March 2024
Shares of several companies, in which Dubai-based hawala operator Hari Shankar Tibrewala (sometimes mentioned as Tibrewal) owns a stake through the foreign portfolio investor (FPI) route, continue to fall on Indian stock exchanges. Cellecor Gadgets Ltd, in which Tano Investments Opportunities Fund holds 13%, hit its lower circuit of 20% to Rs190.80. The two FPIs allegedly used by Mr Tibrewala to own stakes in Indian companies are Zemith Multi Trading DMCC and Tano Investment. Among the other stocks affected were JTL Industries, Balu Forge and Sigachi Industries.
 
Earlier this month, the directorate of enforcement (ED), informing about its searches on the money laundering networks linked with Mahadev Online Book, revealed that Mr Tibrewala, who hails from Kolkata but is currently residing in Dubai, is a huge hawala operator and has partnered with the promoters of Mahadev Online Book. 
 
It says, "ED conducted searches at his known premises and at the premises of his (Mr Tibrewala's) associates. The searches revealed that Mr Tibrewala owned and operated one of the illegal betting websites, skyexchange. He, through his Dubai-based entities, was investing the betting proceeds in the Indian stock market by way of the FPI route. He had also employed many of his associates as director in various companies which were involved in the layering of the betting proceeds by investing them in the stock market." 
 
"He was also involved in large-scale hawala movement of the betting funds. Accordingly, security holdings worth Rs580.78 crore in the name of the entities beneficially owned by Mr Tibrewala have been frozen by ED under PMLA," the agency says. 
 
According to reports, following numerous searches, the ED is in the process of obtaining statements from the promoters of listed companies who purportedly utilised Mr Tibrewala's aid to allegedly manipulate stock prices. As part of the investigation, the ED has also apprehended two associates of the Mahadev group who are responsible for managing its operations in India.
 
Quoting sources, a report from Times of India (ToI) says, stockbrokers and other intermediaries were connected to Mr Tibrewala and promoters of the listed companies. "Mr Tibrewala's funds helped them to manipulate share prices, resulting in significant profits for both but causing losses to small investors. The ED has identified all those connected to the chain, including the promoters, and will summon them for their statements," the report says. 
 
In a release last week, ED says Mr Tibrewala used Suraj Chokhani to launder and hide proceeds of crime under the guise of share investment for Indian companies. It says, "Majority of source for these investments has been collected by way of receiving bank entries against cash in these companies and utilising the proceeds for investment in share market. As of 29 February 2024, the Indian companies under the control of associates of Mr Tibrewala held around securities worth Rs580 crore in stock portfolios. Foreign entities also invested in India via FPI route and as of 29 February 2024 they were found to be holding securities worth Rs606 crore in stock portfolios." 
 
"The searches in Kolkata also revealed that Mr Tibrewala was also involved in the manipulation of the stock market in collusion with the promoters of the listed companies. Mr Tibrewala, using his immense capital, used to create temporary fluctuations in share prices, driving them upwards, and then withdraw funds once the prices reached a desirable level," ED says.
 
The shares of Gensol Engineering Ltd, in which Zenith DMCC owns 1.64% as of 31 December 2023, closed Monday at 7.67% down to Rs935.
 
Trading in Servotech Power Systems Ltd was frozen at the lower end of the 5% intra-day circuit filter at Rs82.10 after there were only sellers in the scrip. Pritika Auto Industries Ltd fell nearly 2% to Rs33.75. Balu Forge Industries shares fell 3.79% to end the day at Rs202.
 
Zenith DMCC holds a 4.7% stake in Servotech Power Systems, 1.57% in Pritika Auto and 1.1% in Balu Forge.
 
OK Play India Ltd, in which Tano Investment holds 10.3%, ended Monday 5% down at Rs17.40.
 
Tano Investment, the only foreign institutional investor (FII), holds a 4.87% stake in shares of Delhi-based arbitrage firm BLB Securities. The company scrip was down 2% to Rs44.91. 
 
Manoj Vaibhav Gems & Jewellers Ltd, in which Tano Investment owns a 1.8% stake, fell 6.65% to Rs204.70. HMA Agro Industries, in which Tano Investment owns 1.11%, fell 8.84% to close the day at Rs56.17.
 
Tiger Logistics (India) Ltd, in which Tano owns a 3.16% stake, ended Monday nearly 5% down at Rs64.55. Tano Investment owns a nearly 10% stake in Krishival Foods Ltd. The scrip also fell 5% to close the day at Rs251. 
 
Mahadev Online Book is an umbrella syndicate arranging online platforms for enabling illegal betting websites to enrol new users, create user IDs and launder money through a layered web of benami bank accounts. 
 
ED investigation revealed that the operations of Mahadev Online Book are being run from Dubai and it operates by franchising 'panel/ branches' to their known associates on a 70%-30% profit ratio. Mahadev Online Book's main promoters are also partners or promoters in multiple online betting books like 'Reddy Anna' and 'Fairplay’. Large-scale hawala operations are done to siphon off the proceeds of betting proceeds to off-shore accounts, the ED says.
 
Earlier in this case, movable properties worth Rs572.41 crore were seized or frozen by ED during searches conducted under the Prevention of Money Laundering Act (PMLA). It also issued two provisional attachment orders, attaching movable and immovable properties valued at Rs142.86 crore. ED has apprehended nine accused in this case and, so far, the total attachment and freezing in the case is Rs1,296.05 crore, the agency says.
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