Rotomac loan default case: Inquiries by bank blew the lid off Vikram Kothari’s ‘fictitious trades’
The CBI has registered a case against Rotomac promoter Vikram Kothari, wife Sadhana and son Rahul for defaulting on loans worth Rs 2919.39 crore from a consortium of seven public sector banks.business Updated: Feb 21, 2018 07:34 IST
The Bank of Baroda had allegedly found during enquiries that Rotomac’s overseas suppliers and buyers in Hong Kong, Dubai and Sharjah were either closed or operating through virtual offices. This apparently prompted the state-owned bank to complain to the CBI that the company’s promoters were carrying out fake mercantile trade.
The CBI has registered a case against Rotomac promoter Vikram Kothari, wife Sadhana and son Rahul for defaulting on loans worth Rs 2919.39 crore from a consortium of seven public sector banks. The agency is questioning the trio since Monday.
The Bank of Baroda said on Tuesday that Rotomac Global Private Limited, which primarily made pens, engaged in intermediary trade and didn’t provide documents for its mercantile trades, which raised suspicion whether these transactions were genuine.
The complaint said the company used to submit photocopies of bills of lading (a detailed list of a ship’s cargo) and other papers of merchant transactions on the pretext that original papers were sent to the importer.
All these papers originated at overseas centres. The bank could not establish the chain of transactions and in most cases, insurance papers of goods were allegedly not submitted.
“Our representative from the Hong Kong branch visited the address given for Gulf Distribution Limited there and found the company was maintaining a virtual office,” the complaint says.
The company was allegedly using the secretarial services of a public accountant in Hong Kong to maintain the so-called office. The Bank of Baroda representative found only an office boy during a visit to the office of Pacific Universal General Trading LLC, the complaint says.
In Sharjah, the bank’s representatives visited offices of Magnum Multi Trade and Triumph International FZE but they were allegedly closed.
The bank said the company was working for interest rate differential in local and foreign money in addition to mercantile trade. The entire business was allegedly carried out by fictitious and front companies.
The bank said in case of letters of credit (LC) issued to Rotomac, the company was receiving money back from a sister concern of the importer at a discount of 1.865% by discounting the LC.
The bank alleged that the packing credit (PC) sanctioned or disbursed to the company was utilised for purposes other than executing the export order.
For instance, a PC of Rs 15.50 crore was disbursed on January 25, 2012 for executing an export order of around $4.1 million. Instead, the company remitted Rs 10 crore from the disbursed amount to accounts of Rotomac and utilised Rs 5.35 crore to import gems and jewellery from Madrid Implex, the bank alleged.
Similarly, another PC of around Rs 33 crore for an export order received from Starcom Resources Pte of Singapore for supply of wheat was credited to Rotomac and then remitted to Raipur-based Bargadia Brothers Private Limited. Later, Rotomac received inward remittance of $2.5 million from Bargadia, the bank alleged. “It clearly shows that no export was made and the packing credit sanctioned has been misutilised,” it says.
First Published: Feb 21, 2018 07:34 IST