Rotomac scam of Rs 3,700 crore fraud was captured
NEW DELHI: Rotomac promoter Vikram Kothari took public sector banks for a ride between 2008 and 2013 by getting foreign letters of credit (FLCs) for making payments to his buyers and suppliers abroad who operated from virtual offices in places like Dubai, Sharjah and Hong Kong.
Instead of paying to buyers/suppliers, the money was returned to accounts of Rotomac and its sister companies.
For example, Rs 15.50 crore in packing credit disbursed to Rotomac’s current account for implementing an export order of $4.2 million was sent to the company’s other accounts through RTGS.
Similarly, BoB gave packing credit of around Rs 34 crore for an export order received from Starcom Resources PTE Singapore for the supply of 15,700 tonnes of wheat.
This money was sent to the account of one Bargadia Brothers Pvt Ltd. The CBI FIR claimed that Rotomac received around Rs 16 crore from Bargadia immediately after this.
“It undoubtedly shows that no export was made and the packing credit sanctioned was fraudulent,” BoB said in its complaint to the CBI.
Kothari indulged in trade for which incomplete documents were produced, or the company submitted copies of bills of loading and other documents of dealings on the pretext that original papers were sent to the importer.
Most of the papers, the CBI claimed, created in overseas centers.
BoB alleged the company did not attach the packing list, compulsory insurance copies of goods, certificate of origin of goods, or the inspection certificate from third parties while submitting documents to it.
When BoB officials visited Rotomac’s suppliers and buyers abroad, they found that the import/export business was allegedly running through shell companies.
“Our representative from the Hong Kong branch visited the address given by Rotomac for Gulf Distribution Ltd and found that the latter preserved a virtual office and physical office was not present,” BoB said in its complaint to the CBI.
Similarly, when BoB’s Dubai branch officials visited the office of supplier Pacific Universal General, they found only an office boy there. In Sharjah, the office of a buyer/supplier was found closed. The bank alleged that Kothari and Rotomac violated Foreign Exchange Management Act rules and worked for interest rate differential in local and foreign currency in the guise of trade without having any genuine business transactions. BoB also alleged that Rotomac was routing sale transactions from one company and purchase transactions from another.
Of this, the CBI FIR revealed, Rotomac owed Rs754.77 crore to Bank of India, Rs456.63 crore to Bank of Baroda,
Rs771.07 crore to Indian Overseas Bank, Rs458.95 crore to United Bank of India (UBI), Rs330.68 crore to Allahabad Bank,
Rs49.82 crore to Bank of Maharashtra, and Rs97.47 crore to the Oriental Bank of Commerce (OBC).