The Central Bureau of Investigation (CBI) has lodged a case against Kanpur-based Rotomac Global and its directors for allegedly cheating a consortium of banks led by Indian Overseas Bank to the tune of Rs of Rs 750.54 crore.
Indian Overseas Bank has an exposure of 23 per cent in the matter.
A senior CBI official said that they lodged a case under sections 120-B (Criminal Conspiracy), 420 (Cheating) read with sections of the Prevention of Corruption Act against the firm and its directors, Sadhna Kothari and Rahul Kothari.
Rotomac Global was in the business of writing instruments. The firm had a total outstanding of Rs 2,919 crore against the consortium of seven banks. Apart from the CBI the Enforcement Directorate (ED) has also initiated a money laundering probe against the firm.
On June 28, 2012, the firm was allotted a non-fund-based limit of Rs 500 crore. On June 30, 2016, their account was declared a non performing asset (NPA) — at that time it had an outstanding of Rs 750.54 crore. The firm had to pay this amount to the banks.
The bank sent the firm eleven Letters of Credit to settle the issue. The firm and bank had reportedly reached a settlement on Rs 743.63 crore. The bank had asked the firm to submit relevant documents. The firm had overseas business and the documents were necessary but the firm allegedly didn’t furnish the complete set of documents.
The CBI has said that the LCs were issued favouring two parties, Fareast Distributors and Logistic P Ltd and RBA Venture Ltd but the probe agency had doubts about the accused firm as the complete set of documents was not provided.
The bank then decided to conduct a forensic audit of the firm. In the audit irregularities were found in the billing of the firm. The firm was in business with four parties which was of Rs 26,143 crore. This amount was 92 percent of the total sales.
The CBI has alleged in the FIR that the major seller of products to Rotomac Group is Bunge group.
“Rotomac Group supplied products to four groups. Bunge group is the major buyer for these parties. It indicates fraud,” the CBI has alleged.
The CBI has lodged a FIR and is looking into the matter.