Rotomac owner pens bank fraud

New Delhi: Every scam has a signature, a hallmark, an ingenious spin in its architecture and construct. The Rotomac swindle has its own DNA.

Pen maker Rotomac and its promoters — the Kotharis from Kanpur —  worked on the principle of an interest rate differential in local and foreign currency in the guise of merchanting trade without having any genuine business transactions and hence defaulted in meeting its payment obligation to banks by diverting and siphoning off all the funds.

The company, its directors and guarantors right from the beginning had dishonest intentions not to pay back the bank’s funds and has thus committed fraud upon the bank, according the CBI charge sheet in the case.  

The Central Bureau of Investigation (CBI) said on Monday that it has registered a case against pen maker Rotomac Global and officials of seven banks (BoI, OBC, BoB, Allahabad Bank, Bank of Maharashtra, Union Bank and IOB under leadership of Bank of India) in connection with an alleged Rs 2,919 crore loan scam.

Once again the original Rs 800 crore has now inflated to almost Rs 3,000 core.

The CBI added that “it was alleged in the complaint that in the Rotomac case, conspirators cheated a consortium of seven banks by siphoning off bank loans to the tune of Rs 2,919 crore (principal amount).” All told, the amount including interest works out to Rs 3,695 crore.

After PNB has got embroiled in the Nirav Modi/Mehul Choksi fraud, the contagion of Rotomac has tarred India’s third largest PSB — Bank of Baroda. Porous banking channels and compromised officials  complete the tale of woe at BoB. Present outstanding in BoB’s case is Rs 456.63 crore.

Here again, what has emerged is that at the instance of the BoB corporate office, overseas centres in Dubai and HongKong tried to contact the debtors of the company at their centre in Kanpur, but were unable to do so as only the virtual offences were found. From the date  in respect of issuance of LCs (letters of credit), booking of forward contract, its utilisation and authorisation and cancellation mentioned in various sanctions and review proposals reveals that the borrower (Kotharis) has cancelled more forward contracts than actually utilised for payment of LC. After going through multiple transactions, CBI discovered that no activity chain can be drawn from bills of lading. The shipping party and or notified party in the bill of lading do not match with parties in LC and or party through which the inward remittance amount has been received. CBI has slapped offences punishable under section 120 B read with 420, 467, 468, 471 IPC and 13 (2) read with 13 (1) d of PC Act 1988. Incidentally the fraud was detected on December 29, 2017.

Rotomac was engaged in intermediary trade along with manufacture of writing instruments. The company was enjoying Non Fund Based limit of Rs 2,919.39 crore under consortium banking arrangement with member banks.

Rotomac Global tied up with Pacific Global and Bunge. Both these companies have sister concerns too. So, Rotomac routed sale transactions from one company and purchase transactions from other sister concerns. The company routed.

Rotomac Global Pvt Ltd was receiving money back from the importer’s sister concern at a discount of 1.865 per cent by discounting the LC at the overseas centre. In some cases, it was found that the bill of lading submitted by the company does not have the name of the supplier as well as the buyers.

Pointing out to all security protocols and firewalls being breached just as they were at PNB. In this case, FEMA guidelines have also been violated and as a consequence, the Enforcement Directorate has been roped in to find out more.

The web was carefully crafted. Fictitious and non-existent or virtual office of Gulf Distribution Ltd have been found in Hong Kong. It used secretarial services of C.K. Liu & Co for this purpose in HK. Ditto in Dubai where Pacific Universal General Trading  LLC premises found an office boy, CEO Peramal Praful Kumar and Kewal Ramani refused to divulge any information. Similarly offices of Magnum Multi Trade and Triumph International FZE were found closed in Sharjah.

At the very centrality of the scam is Grains & Ind-ustrial Products Trading which as per credit report of Dun & Bradstreet said is a subsidiary of Bunge, while Pacific Universal is an associate concern of DIPAR International.

Interestingly, the net worth of the accused — Vikram Kothari — is given as Rs 42.26 crore, while his wife Sadhna Kothari is shown having a net worth of Rs 53.30 crore and son Rahul Kothari Rs 6.80 crore.

Vikram Kothari is the chairman and MD of Kanpur-based Rotomac Global Private Limited.

Belonging to a well- known and well-heeled Kanpur-based business family, Mr Kothari had set up his stationery business under the name of Rotomac in the 1980s. His brother, Deepak Kothari is the owner of Pan Parag, a prominent mouth-freshner brand in India. In the late 90s, the family business was divided among the two brothers with Vikram getting the ownership of Rotomac, while his brother Deepak was given Pan Parag.

Like Modi/Choksi, he had spread his wings aggressively, Mr Kothari heads Rotomac Exports, Kothari Foods and Fragr-ances, Crown Alba Wri-ting Instruments, Mohan Steels, RFL Infra-structure and Rave Entertainment, besides Group’s real estate ventures at Kanpur, Lucknow, Dehradun and Ahmedabad.