CBI books Rotomac Pen owner Vikram Kothari & family for Rs 3,695-crore ‘default’, seals house in Kanpur

According to CBI, the loans were granted by a consortium of seven banks led by Bank of India beginning 2008 for purported import of wheat. However, no wheat was imported and the money was allegedly diverted, the complaint filed by Bank of Baroda (BoB) with CBI has said. BoB is one of the consortium banks that has an outstanding of Rs 456.63 crore.

The FIR has booked Rotomac Global Pvt Ltd, Vikram Kothari, his wife Sadhana and son Rahul (both directors) in the case. The company took loans worth Rs 2,919 crore which soared to Rs 3,695 crore with interest. “The credit sanctioned and disbursed to the company was utilised for purposes other than executing export orders,” the CBI FIR said.

It details that a packing credit for Rs 15.50 crore disbursed on January 25, 2012 for executing export order for $41.82 lakh was split and remitted to Rotomac Global (Rs 10 crore) and M/S Madrid Implex (Rs 5.35 crore for purchase of jewellery).

Citing another such transaction as an example of the fraud, the CBI FIR said: “Credit sanctioned for export order received from M/S Starcom Resources, Singapore, for supply of 15,700 MT of wheat was diverted to another company M/S Bargadia Brothers Pvt Ltd Singapore. Later the money was remitted to Rotomac,” the FIR said.

It added: “…In other cases money disbursed for procurement of goods for export was not utilised for this purpose and no export order was executed by the company. Money remitted to suppliers for procurement of goods for export disbursed through Packing Credit Account was settled from remittances received from third parties, not related to export transactions.”

This, the FIR said, “is misappropriation of funds, criminal breach of trust, and violation of Foreign Exchange Management Act (FEMA) guidelines. Most of the transactions of this company are with limited number of buyers, sellers, sister companies and subsidiary companies.”

After the company defaulted on loans, an investigation by the banks found that the company had was round-tripping loans through sister concerns and its suppliers had no physical office.

“On making default bank decided to visit the offices of the company’s suppliers and buyers. Our representative from Hong Kong Branch visited the address given by the company for M/S Gulf Distribution Ltd and found that the company is maintaining a virtual office and any physical office of the above was not present at the address,” the BoB complaint to CBI said.

It similarly noted that the company made “tie-up arrangements with M/S Pacific Global and M/S Bunge. Both these companies are having sister concerns also. The company was repeating sale transactions from one company and purchase transaction from other sister concerns. It is evident that Rotomac Global was receiving money back from the importer’s sister concern at a discount.”

The consortium also includes Indian Overseas Bank, United Bank of India, Allahabad Bank, Bank of Maharashtra and Oriental Bank of Commerce.

BoB had in February 2017 declared Rotomac as a “wilful defaulter”. Rotomac had contested the tag in court on the ground that it had offered Rs 300 crore assets to the bank and still it had called it a wilful defaulter. The company had got an order in its favour but still failed to pay the loans.

It has alleged that the company was merely indulging in foreign exchange interest rate differentials. “The company was working for interest rate differentials in local and foreign currencies in the guise of merchanting trade without having any business transaction and defaulted in meeting its payment obligations to bank by diverting and siphoning off the funds. The company and its guarantors right from the beginning had dishonest intention not to pay the bank’s funds,” the BoB complaint to CBI said.

These goals were achieved, according to the FIR, through a number of fictions and front companies. It has also alleged that the companies submitted “forged and false documents to induce banks to grant loans.”