The CBI on Monday arrested managing director of Rotomac Global Pvt ltd Vikram Kothari from Kanpur in the mega loan default scam and revealed that exposure of different banks stood at nearly Rs 3,700 crore in the murky saga. The CBI swung into action after the Bank of Baroda late on Sunday night registered a complaint against Kothari with the agency.
The CBI raids and searches started at 4 am on Monday at residence and office premises of Kothari in Kanpur and Delhi.
In its FIR, the CBI has made case of cheating and siphoning off Rs 3,695-crore loan taken by Kothari from consortium of seven banks headed by Bank of India since 2008. In the FIR, the CBI has named Kothari, his wife Sadhana Kothari, his son Rahul Kothari and unknown bank officials and private persons. The Enforcement Directorate (ED) has also registered a money laundering case against them.
Initially, the scam was estimated to be of Rs 800 crore but after the CBI went through the accounts of the company, it found that the loan amount was much higher and involved Bank of Baroda, Bank of India, Bank of Maharashtra, Indian Overseas Bank, Union Bank of India, Allahabad Bank and Oriental Bank of Commerce.
In Kanpur, the CBI conducted raids on Kothari’s residence at Tilak Nagar, office at Mall Road and factory at Panki Industrial area. The investigative agency also conducted raids on two premises of Kothari’s close associate. The agency quizzed Kothari, his family members, two directors and several staff members for about 12 hours and seized several incriminating documents, laptops, iPads and iPhones from the residence, office and factory of Kothari.
After the search, the CBI sealed the office, factory and residential apartment of Kothari. “A residential apartment and office premises of the accused at Delhi has been sealed,” said CBI Spokesperson Abhishek Dayal.
According to the CBI, Kothari and his family members have been booked under misappropriation, criminal breach of trust, diversion of funds and violation of foreign exchange act.
The CBI said Rotomac has cheated a consortium of seven banks by siphoning off bank loans to the tune of Rs 2,919 crore, excluding interest are Bank of India (Rs 754.77 cr), Bank of Baroda (Rs 456.63 cr), Indian Overseas Bank (Rs 771.07 cr), Union Bank of India (Rs 458.95 cr), Allahabad Bank (Rs 330.68 cr), Oriental Bank of Commerce (Rs 97.47 cr) and Bank of Maharashtra (Rs 49.82 cr). The agency said total outstanding amount, along with interest liabilities for M/s Rotomac, is At Rs 3,695 cr, Rotomac Pens' fraud gets bigger
According to information available on Rotomac website, Kothari heads Rotomac Exports Pvt ltd, Kothari Foods and Fragrances, Crown Alba Writing Instruments, Mohan Steels limited, RFl Infrastructure Pvt ltd and Rave Entertainment Pvt ltd, besides Group’s real estate ventures at Kanpur, lucknow, Dehradun and Ahmedabad.
According to the CBI officials, the credit sanctioned for any 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.
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 misappropriation of the fund, criminal breach of trust and violation of FEMA guidelines, the officials said.
Most of the transaction of these companies was with limited number of buyers, sellers sister companies and subsidiary of this company. 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 CBI further stated that Kothari also did not submit original documents needed to avail of loans for Rotomac and he had also submitted photocopies of fake bills to banks and did not submit copies of insurance of goods procured and supplied.
It was also revealed that Kothari had taken a loan of Rs 485 crore from Mumbai-based Union Bank of India and a loan of Rs 352 crore from Kolkata-based Allahabad Bank. In 2017, Bank of Baroda, a consortium partner, declared Rotomac Global Pvt ltd a “wilful defaulter”. After Bank of Baroda’s declared Rotomac a willful defaulter, the company moved the Allahabad High Court against the decision. The court said the company was wrongly declared a wilful defaulter despite having “offered assets worth more than Rs 300 crore to the bank since the date of default”.Rotomac was declared a wilful defaulter through an order dated February 27, 2017.
On the other hands, the ED said the agency had lodged the case under the Prevention of Money laundering Act (PMlA), after studying the CBI FIR that was registered. The ED, officials said, would probe if the funds obtained through the alleged fraud were laundered and if the proceeds of the crime were subsequently used by the accused to create illegal assets and black money.
This is the second major bank fraud to surface in the recent past after the sensational Rs 11,400-crore Punjab National Bank (PNB) fraud, allegedly committed by diamond merchant Nirav Modi and his uncle Mehul Choksi, who is a promoter of the Gitanjali Group of companies. Both Modi and Choksi have fled the country.