New Delhi, Feb 19 Rotomac Global Private Limited cheated a consortium of banks to the tune of Rs 3,695 crore (including interest) by siphoning off loans sanctioned to the company for procurement of wheat and other goods for export.
No export was undertaken, though, according to officials of the Central Bureau of Investigation (CBI) who referred to details given in the Bank of Baroda complaint.
The central agency filed an FIR on Sunday night in the case after getting a complaint against the Rotomac Pen company's chief Vikram Kothari, his wife Sadhana and son Rahul. The complaint said that the consortium of seven banks had extended credits to the Kanpur-based firm and its related companies from 2008 onwards.
Kothari is the Chairman and Managing Director of Rotomac while his wife and son are directors of the company.
Kothari had obtained Rs 2,919 crore from the consortium of seven banks -- 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) and Oriental Bank of Commerce (Rs 97.47 crore), the FIR by the CBI said.
CBI Spokesperson Abhishek Dayal quoting Bank of Baroda complaint said: "Rotomac cheated the consortium of banks by siphoning off bank loans."
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 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 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 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.
The CBI FIR named Kothari, his wife, son, his firm Rotomac, some unidentified bank officials and private persons who have been booked on charges of criminal conspiracy, cheating and forgery under the Indian Penal Code and Prevention of Corruption Act.
The CBI on Monday raided several locations in Kanpur in connection with the loan default by the Rotomac and its directors. The CBI also sealed a residential premises and an office of Rotomac in New Delhi.
Coming close on the heels of the Rs 11,300 crore Punjab National Bank's fraud, the Rotomac case that surfaced on Sunday had fanned speculations that Kothari too, might try and flee the country. However, the CBI could reach Kanpur and question the three accused.