The CBI has sued Kanpur-based Rotomac Global and its directors for Rs 750.54 crore for alleged fraud at the Indian Overseas Bank, officials said.
The writing instrument business has a total outstanding of Rs 2,919 crore against a consortium of seven banks led by Bank of India in which Indian Overseas Bank has an exposure of 23 percent.
The agency has charged the company and its directors – Sadhna Kothari and Rahul Kothari – under IPC sections relating to criminal conspiracy (120-B) and deception (420), in addition to several provisions of the Prevention of Corruption Act.
The company is already facing several investigations by the CBI and the Enforcement Directorate based on complaints from consortium members.
In its complaint to the CBI, now a part of the FIR, the Indian Overseas Bank alleged that the company was issued a non-fund based limit of Rs 500 crore on June 28, 2012.
The account was declared a non-performing asset on 30 June 2016, with an outstanding amount of Rs 750.54 crore after default.
The bank claimed that it had issued 11 Letters of Credit (LC) to meet the company’s foreign trade requirements, all of which were transferred for a total amount of Rs 743.63 crore, leaving no security for the bank.
The company did not produce the full set of documents for the trading it conducted, and all LCs were issued in favor of two parties: Fareast Distributors and Logistic P Ltd and RBA Venture Ltd.
The bank claimed that the lack of documents raises doubts about the authenticity of the merchant ship and the voyages claimed in the bills of lading.
The forensic audit conducted by the bank pointed to alleged tampering in account books and non-disclosure of liabilities arising from LCs.
The audit also found irregularities in sales contracts, waybills and associated voyages.
It pointed out that 92 percent of the total sale, amounting to Rs 26,143 crore, was made to four parties of the same owner and group.
“The main supplier to these parties is Rotomac Group, while the main buyer for these parties is the Bunge Group. The main seller of products to the Rotomac Group is the Bunge Group. All four foreign customers are related to the Group the bank claimed.
The forensic audit “substantially flagged” several indicators that indicate the company did not conduct an actual business transaction.
The company is alleged to have defrauded the bank and fraudulently transferred funds, causing itself financial losses and ill-gotten gains amounting to Rs 750.54 crore, which is yet to be recovered from the accused.
(Except for the headline, this story has not been edited by NewsMadura staff and is being published from a syndicated feed.)
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