CBI, ED probe Rotomac promoters for cheating 7 banks of Rs3,695 cr
20 February 2018
Banks' exposure to Vikram Kothari swelled to Rs3,695 crore with the Central Bureau of Investigation (CBI) and the Directorate of Enforcement (ED) on Monday filing separate cases against the Rotomac promoter for allegedly siphoning off funds from seven banks in 2008.
The CBI registered the case after receiving a complaint from Bank of Baroda against Kanpur-based Rotomac Global Pvt Limited, its director Vikram Kothari, his wife Sadhana Kothari, and son Rahul Kothari and unidentified bank officials.
The agency alleged that the accused had cheated seven banks, including Bank of Baroda, by siphoning off loan funds to the tune Rs2,919 crore. The amount along with interest and liabilities for the company has swelled to Rs3,695 crore, the CBI alleged.
The scam amount swelled from the initial Rs800 crore after the agency conducted raids at residential and office premises of the accused at Kanpur.
It was found that the company had besides Bank of Baroda the company had taken loans from six other banks, including Bank of India, Bank of Maharashtra, Indian Overseas Bank, Union Bank of India, Allahabad Bank and Oriental Bank of Commerce.
A search of the company's accounts revealed that besides Rs456.63 crore from Bank of Baroda, the company had taken Rs754.77 crore from Bank of India, Rs771.07 crore from Indian Overseas Bank, Rs458.95 crore from Union Bank of India, Rs330.68 crore from Allahabad Bank, Rs49.82 crore from Bank of Maharashtra and Rs97.47 crore from Oriental Bank of Commerce.
The CBI carried out searches at three locations in Kanpur, which included Kothari's residence and office premises.
However, no arrests have been made in the case so far, CBI spokesperson Abhishek Dayal said Kothari, his wife and son were being examined by the CBI.
It was found that the company never used the credit sanctioned and loan disbursed by banks for executing export orders. Instead these funds were diverted to a different offshore company and later the money was remitted back into the Kanpur-based company without executing an export order.
In some cases, the money disbursed by the banks for procurement of goods for export was not utilised for the purpose and no export order was executed.
The company's transaction were limited to a few sister companies and subsidiaries with limited number of buyers and sellers.
It was alleged that the company was working on interest differentials in local and foreign currency and used fake documents to induce banks to advance money.
CBI officials alleged the misappropriation of the fund amounted to criminal breach of trust and violation of FEMA guidelines.
The Enforcement Directorate, meanwhile, registered a case of alleged money laundering against Rotomac pens, its promoter Vikram Kothari and his family members in connection with alleged bank loan fraud of Rs3,695 crore.
The agency registered the case under the Prevention of Money Laundering Act (PMLA), after studying the CBI FIR filed on Monday.
The ED is probing if the funds obtained through the alleged fraud were laundered and if the proceeds of the crime were used to create illegal assets and black money.
This is the second major financial scam to break out within days after the sensational Rs11,400 crore fraud allegedly committed by billionaire jewellery designer Nirav Modi and his uncle and promoter of Gitanjali group Mehul Choksi.
Both had fled the country by the time the Punjab National Bank scam unfolded.