Rotomac fraud: CBI quizzes ex-CMD of BOB, 5 others

NEW DELHI: The Central Bureau of Investigation is questioning, for past three days, former Chairman-cum-Managing Director – M D Mallya, two former executive directors– V Santhanaraman and R K Bakshi, and three other former officers of Bank of Baroda in Rs 3,695 crore fraud committed by Rotomac promoter .

Sources said that Mallya, two EDs, a general manager, a deputy general manager and one board director are being questioned about the loans given to Kothari’s companies on the basis of bogus claims that he had to make payments to his buyers and suppliers in Dubai, Sharjah and Hong Kong. It turned out that the buyers and suppliers listed by Rotomac didn’t exist in these countries.

After registering a case in February, CBI had arrested Vikram Kothari Kothari and his son Rahul Kothari as they were no cooperating and didn’t disclose details of the shell companies and where was the loan money used.

It has been alleged that Rs 2,919 crore was siphoned by the Kotharis, which together with penalties reached Rs 3,695 crore. A consortium of seven banks led by Bank of India gave him loans 2008 onwards with BoI‘s exposure being Rs 754 crore. Among other lenders, Bank of Baroda had advanced Rs 456.63 crore, Indian Overseas Bank Rs 771 crore, Union bank of India Rs 459 crore, Allahabad Bank Rs 330 crore, Bank of Maharashtra Rs 50 crore, Oriental Bank of Commerce Rs 97 crore.

Kothari got loans disbursed on the basis of foreign letters of credit (FLCs) on the pretext of making payments to his buyers and suppliers in places like Dubai, Sharjah and Hong Kong. It was found that Kotharis provided incomplete documents or photocopies of bills of loading to the banks on the pretext that original papers were sent to the importer.

The banks have alleged that Rotomac did not attach the packing list, mandatory insurance copies of goods, certificate of origin of goods, or the inspection certificate from third parties while submitting documents to it. When bank officials visited Rotomac‘s suppliers and buyers abroad, they found that the import/export business was allegedly running through shell companies.

The banks have also claimed that 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.

The came to light when Rs 13,578 crore Punjab National Bank scam was unearthed in February this year.

The banks in Rotomac case felt that Kotharis may flee the country and asked CBI to investigate him.

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