Bank fraud case: ED raids multiple locations in Maharashtra against Pune-based group

The ED conducted multiple searches in Maharashtra on Thursday against a Pune-based alloy-making group on charges of money laundering through an alleged bank fraud to the tune of about Rs 300 crore.

The central agency said it raided the factory and residential premises of Varron Aluminium Private Limited (VAPL) and Varron Auto Comp Private Limited (VACL) in Pune, Ratnagiri, Sangli and Nagpur in a case in which the Bankof India (BoI) was cheated by alleged misuse of the Letters of Credit (LC) facility.

An LC denotes an official letter issued by a bank to another bank to serve as a guarantee for payments made to a specified person under specified conditions.

The searches were carried out after the Enforcement Directorate (ED) filed a case under the Prevention of Money Laundering Act (PMLA), based on an FIR lodged by the Central Bureau of Investigation (CBI).

The BoI was the complainant in the case, the ED said.

The agency, in a statement, said VAPL maintained a current bank account with the Karve Road branch of the BoI in Pune and that the firm "submitted LCs and bills drawn from a Canara Bank branch in the same city, which were negotiated or discounted" in favour of the BoI.

"The bills were discounted by the BoI after the verification of the LC and acceptance of all the bills by the authorised officials of Canara Bank (Deccan Gymkhana, Pune branch) and the aggregate amount of Rs 293 crore was credited to the account of VAPL," it said.

Later, when the BoI approached the Canara Bank for re-payment of dues, the latter informed that "the purported LC was neither issued nor bills were accepted by their branch through the approved mode of Structured Financial Messaging System (SFMS) and thus, they did not entertain the repayment request of the BoI, the ED alleged.

"This resulted in a loss to the Bank of India," the agency said.

It said Shrikant Pandhurang Sawaikar, the director and the main man behind VAPL, along with Canara Bank officials and other private individuals, "entered into a criminal conspiracy to cheat the BoI".

"In pursuance to the said criminal conspiracy, a non-genuine LC, commercial invoices and lorry receipts were used for the release of Rs 293 crore in the account of VAPL," the ED said, adding that it resulted in a fraud and the bank suffering losses.

The agency said its probe, so far, had revealed that the said money "was immediately transferred through various accounts and finally utilised for settling old dues and making fixed deposits" by the accused.

Further investigation to establish the money trail and attachment of assets was under progress, it added.