Rotomac pen promoter Vikram Kothari faced heat of central agencies after the Central Bureau of Investigation (CBI) as well as the Enforcement Directorate (ED) registered separate cases against him and his company for allegedly swindling of billions from seven banks from 2008.
Initially, the alleged scam was estimated to be of Rs 8 billion (Rs 800 crore) but after the CBI started to probe into the accounts of the company, it was found that the company had allegedly taken loans from Bank of India, Bank of Maharashtra, Indian Overseas Bank, Union Bank of India, Allahabad Bank
and Oriental Bank of Commerce
The CBI alleged that the accused had cheated a consortium of seven bank by siphoning off bank loans to the tune Rs 29.19 billion (Rs 2,919 crore).
The total outstanding amount along with interest and liabilities for the company were pegged at Rs 36.95 billion (Rs 3,695 crore), the CBI alleged.
While making clear that no arrests have taken place in the case so far, CBI spokesperson Abhishek Dayal said Kothari, his wife and son were being examined by the CBI.
According to the CBI officials, the company allegedly used two modus operandi for siphoning off the loans secured from consortium of banks
from 2008 onwards.
Loan utilised for purposes, other than executing export orders
The CBI alleged that the credit sanctioned for a particular export order was diverted to a different offshore company and later the money was remitted back into the Kanpur-based company without executing an export order.
No export was undertaken, though, according to officials of the CBI who referred to details given in the Bank of Baroda complaint.
Interestingly, the official said Rotomac was working for interest rate
differential in local and foreign currency. "Number of front and fictitious companies were formed to carry out illegal activities by Rotomac which submitted forged documents to obtain the money from the banks," Dayal said.
The official said the credit disbursed and sanctioned to the company was utilised for the purposes other than executing export orders.
"For example, credit sanctioned for export order received from Singapore for the supply of wheat was diverted to a Singapore-based firm Bargadia Brothers Pvt Ltd but the money was later remitted back to Rotomac," he said.
"In other cases, the money disbursed by the bank for procurement of goods and some other export materials was not utilised for this purpose and no export order was executed by the Rotomac."
The official said "this misappropriation of funds" violated the FEMA (Foreign Exchange Management Act) guideline.
Bank of Baroda also alleged in its complaint that "most of the transactions of Rotomac are with a limited number of buyers, sister companies and sellers and no genuine business transactions were carried out, according to other CBI official who did not want to be named.
In other cases, money disbursed by the banks
for procurement of goods for export was not utilised and no export order was executed ever. This is a misappropriation of the fund, criminal breach of trust and violation of FEMA guidelines, the officials said.
It is alleged that the company was working for interest rate
differential in local and foreign currency and even fake documents were submitted to induce banks
to advance money, the CBI alleged.
The agency registered the case under the Prevention of Money Laundering Act (PMLA), after studying the CBI FIR that was registered on Sunday.