The Enforcement Directorate (ED) on 20 February said it had issued a Look-Out Circular (LOC) to all land, sea, and airports in the country to prevent the exit of the promoter of Rotomac pens, Vikram Kothari, and his family members from India, in connection with its money laundering probe into the alleged bank loan fraud of Rs 3,695 crore.
The agency also conducted searches at multiple locations in Uttar Pradesh on Tuesday, including in Unnao and Kanpur, to gather evidence in the case.
Rotomac Pens owner Vikram Kothari was interrogated by the CBI in Kanpur on 20 February, a day after the central investigation agency as well as the ED registered separate cases against him and his company for allegedly swindling of Rs 3,695 crore from seven banks from 2008, reported PTI.
The CBI registered a case, after receiving a complaint from Bank of Baroda, against Rotomac Global Pvt Limited, its director Vikram Kothari, his wife Sadhana Kothari, son Rahul Kothari, and unidentified bank officials.
According to the FIR copy, the loan exposure of banks is as follows:
- Bank of India: Rs 754.77 crore
- Bank of Baroda: Rs 456.63 crore
- Indian Overseas Bank: Rs 771.07 crore
- Union Bank of India: Rs 458.95 crore
- Allahabad Bank: Rs 330.68 crore
- Bank of Maharashtra: Rs 49.82 crore
- Oriental Bank of Commerce: Rs 97.47 crore
- Total: Rs 2,919.39 crore
Initially, the alleged scam was estimated to be worth Rs 800 crore. Later, the CBI alleged that the accused had cheated a consortium of seven banks by siphoning off bank loans to the tune Rs 2,919 crore. The total outstanding amount along with interest and liabilities for the company were pegged at Rs 3,695 crore, the CBI alleged.
‘Not Running Anywhere’: Kothari
The Enforcement Directorate has also filed a case against Kothari under the Prevention of Money Laundering Act (PMLA), after studying the CBI FIR.
The ED, the 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.
Yes, I took a loan from the bank, but it’s wrong to say I am not paying it back. I live in Kanpur and will continue to live here, I am not running away anywhere, no country better than India.Vikram Kothari told ANI
Kothari made the comments following reports alleging that he had fled India after swindling money from various public sector banks.
The CBI began raiding his residence and offices in Kanpur early on 19 February. There were no arrests in the case yet, CBI spokesperson Abhishek Dayal said, adding that the residential premises and an office of the Kotharis in New Delhi have been sealed. He also said that Kothari, his wife and son were being interrogated by the CBI.
The investigating agency, in a statement said:
It was alleged in the complaint that, in the Rotomac case, conspirators cheated a consortium of seven banks by siphoning off bank loans to the tune of Rs 2,919 crore (principal amount). This does not include the interest liabilities of these loans. Total outstanding amount, along with interest liabilities for Rotomac, is Rs 3,695 crore.
Public sector banks like Bank of India, Bank of Baroda, Bank of Maharashtra, Indian Overseas Bank, Union Bank of India, Allahabad Bank and Oriental Bank of Commerce are reportedly involved in the case.
Vikram Kothari’s lawyer Sharad Kumar Birla said that the case was that of “loan default and not fraud”.
Case Files
Kothari took 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. A year later, Kothari has reportedly not paid back either the interest or the loan.
Last year, Bank of Baroda (BoB), a consortium partner declared pen manufacturer Rotomac Global Pvt Limited as a "wilful defaulter".
Allahabad Bank, Bank of India, Bank of Baroda, Indian Overseas Bank, and Union Bank of India compromised their rules to sanction loans to Rotomac, PTI quoted sources as stating.
The company moved the Allahabad High Court seeking removal of its name from the list of wilful defaulters.
A division bench comprising Chief Justice DB Bhosle and Justice Yashwant Verma had passed the order on a petition filed by the company, contending that it has been wrongly declared a "wilful defaulter" by BoB despite having "offered assets worth more than Rs 300 crore to the bank since the date of default".
Rotomac was declared a wilful defaulter in an order dated 27 February 2017 passed by an authorised committee, as per the procedure laid down by the Reserve Bank of India.
The Modus Operandi
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.
Credit sanctioned and loan disbursed to the company was utilised for the 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.
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 transactions of this companies is 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 development comes less than a week after Punjab National Bank (PNB) had detected a scam worth over $1.77 billion wherein Modi allegedly acquired fraudulent letters of undertaking (LoUs) from a branch in Mumbai to secure overseas credit from other Indian lenders.
(With inputs from PTI)
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