CBI has arrested and registered a case against Kothari and his family; the total amount of the fraud is alleged to be Rs 3,695 crore.
New Delhi: Rotomac pens owner Vikram Kothari and his family have been taken into CBI custody for questioning, following allegations of fraud. Acting on a complaint by the Bank of Baroda, the CBI registered a case against Kothari, Rotomac’s directors (Kothari, wife Sadhana and son Rahul) and unknown bank officials. Incidentally, the total amount of money siphoned off from seven state-owned banks by Kothari and others is alleged to be Rs 3,695 crore.
With Kothari now under arrest, it now transpires that he used the loans not for his pen business but for “importing” wheat.
Kothari, owner of the Kanpur-based Rotomac, had allegedly taken loans amounting to Rs 2,919 crore from seven banks, including Allahabad Bank, Bank of India, Bank of Baroda, Indian Overseas Bank, Oriental Bank of Commerce, Bank of Maharashtra, and Union Bank of India. He allegedly did not pay back either the loaned amount or the interest.
“In the complaint given to us by Bank of Baroda, it was alleged that Rotomac cheated a consortium of seven banks by siphoning off bank loans to the tune of Rs 2,919 crore. This is just the principal amount and does not include the interest liabilities of these loans,” a CBI official told ThePrint.
“The total outstanding amount, along with interest liabilities, is Rs 3,695 crore.”
According to sources, Bank of India is the consortium leader, which sanctioned Rs 754.77 crore. Bank of Baroda gave Rs 456.63 crore, Indian Overseas Bank loaned Rs 771.07 crore, Union Bank of India sanctioned Rs 458.95 crore, Allahabad Bank gave Rs 330.68 crore, Bank of Maharashtra gave Rs 49.82 crore and Oriental Bank of Commerce sanctioned Rs 97.47crore.
Following the complaint, the CBI registered a case and also conducted searches at Kothari’s residence and offices in Kanpur. “The CBI is conducting searches at three places in Kanpur and questioning all the three accused directors. We have also sealed a residential premises and an office of the directors in New Delhi,” a CBI official said.
Modus operandi
According to sources, the credit was sanctioned and the loan disbursed to Kothari for importing wheat from a company in Singapore, but the amount was not utilised for the purpose. Instead, it was diverted to another company and the money was later remitted to Rotomac.
“Money was sought from the banks for importing wheat from a Singapore-based company, Bargadia Brothers. But when it was sanctioned, the money was not utilised to buy wheat. The money first went to Bargadia brothers and then came back to Rotomac. No export order was ever executed. This round-tripping of money amounts to misappropriation of funds, criminal breach of trust, and violation of FEMA guidelines,” an official said.
He added: “Most of the transactions of this company are with limited number of buyers, sellers, sister companies, and subsidiaries of this company.”
According to sources, the company was betting on the foreign exchange rate. “The company was working for ‘interest rate differential’ in local and foreign currency. In reality, no genuine business transaction was carried out,” a source said.
The complaint comes just days after Punjab National Bank detected a Rs 11,300 crore scam, wherein businessman Nirav Modi and his uncle Mehul Choksi were issued letters of undertaking from a branch in Mumbai to secure credit from banks abroad. PNB allegedly issued 143 letters of undertaking (LOUs) and 225 Foreign Letters of Credit, amounting to Rs 4,886.72 crore to three of Choksi’s companies over two months. Similar LOUs were also issued in February 2017, to Modi’s companies, eight of which have been mentioned in an initial FIR filed by the CBI.