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The Central Bureau of Investigation (CBI) has booked Kanpur-based businessman Vikram Kothari, his wife and son in connection with the alleged swindling of Rs 36.95 billion of loan funds advanced by a consortium of seven banks to his company Rotomac Global.
The scam has surfaced in the backdrop of Rs 114 billion alleged fraud reported by Punjab National Bank, involving billionaire Nirav Modi and his uncle, Mehul Choksi. Rotomac Global was given loans worth Rs 29.19 billion from 2008 onwards by a consortium of banks led by Bank of India which have swelled to Rs 36.95 billion including the accrued interest, because of repeated defaults on payment, the officials said.
The principal exposure of the banks with regards to the loan is Bank of India Rs 7.54 billion, Bank of Baroda Rs 4.56 billion, Overseas Bank of India Rs 7.71 billion, Union Bank of India Rs 4.58 billion , Allahabad Bank Rs 3.30 billion, Bank of Maharashtra Rs 0.49 billion and Oriental Bank of Commerce Rs 0.97 billion, they said.
The case against Rotomac Global and its directors Vikram Kothari, wife Sadhana Kothari, and, son Rahul Kothari and unidentified bank officials was filed on a complaint received from Bank of Baroda, they said.
The agency has searched three locations in Kanpur, including Kothari’s residence and office premises. There have been no arrests yet, CBI spokesperson Abhishek Dayal said.
He said Kothari, his wife and his son were examined by the CBI, which is conducting the searches. Dayal said a residential apartment and office premises of the accused in Delhi have been sealed. It is alleged that loans were being siphoned off by diverting them from the purpose for which they were taken.
The company adopted two different methods for diverting the funds — loans for exports were round tripped from abroad and loans taken for purchasing export goods were used domestically without executing any export order. In a case, the company was given loan to export wheat to Singapore but it is alleged that Kothari transferred the money to a Singapore-based company Bargadia brothers which sent remittances back to the account of Rotomac Global without any export on ground.
In some other cases, money disbursed by the banks for procurement of goods to export was not utilised and no export order was executed by the company. These are violations of the Foreign Exchange Management Act, misappropriation of funds and criminal breach of trust as the funds given by the banks for specific purposes should be used for the same. The banks have alleged most of the transaction of this company was with limited number of buyers, sellers, sister companies and subsidiary of the company with no genuine business activities.
It is also alleged that the company was using shell companies for carrying out this alleged round tripping operation and had also submitted fake and forged documents to "induce" banks to advance money to it.