Second Scam of Rs 3695 cr Rotomac Promoters Being Probed

CBI books businessman in Rs 3695 cr Rotomac scam case – Here's how funds were allegedly diverted

The CBI on Tuesday continued raids at the same three locations in Kanpur for the second consecutive day as it probed a multi-crore loan default by Rotomac Pen's chief Vikram Kothari.

The banking scam has surfaced in the backdrop of Rs 11,384 crore alleged fraud reported by Punjab National Bank, involving billionaire Nirav Modi and his uncle, Mehul Choksi.

The dollar edge up from thee-year lows while oil hovered near two-week highs on rising geopolitical tensions in the Middle East. CBI has lodged FIR against Kothari, his family members and three directors of the company. On Feb. 18, he, along with wife Sadhana and son Rahul, was booked for conspiring with some bank officials to dupe seven banks of almost Rs3,700 crore ($574 million), a CBI official who didn't want to be identified, told Quartz. The money was later remitted back into the Kanpur-based company without executing an export order, CBI officials have learnt.

In the 1980s, the family business was divided between Mansukhlal's sons: Deepak took control of Kothari Products, which had Pan Parag as its principal product, while stationery brand Rotomac was spun off and given to Kothari. Rotomac Global Pvt Ltd, engaged in intermediary trade and manufacturing pens, routinely approached seven banks, including Bank of Baroda's (BoB's) worldwide business branch at The Mall, Kanpur, seeking credit ranging from Rs 15 crore to Rs 200 crore from 2008 to 2013, mostly for exports and imports.

The raided places included office and residential premises of the company's directors, where searches were conducted on Monday as well, the CBI said.

It alleged the accused had cheated a consortium of seven banks by siphoning off bank loans to the tune of Rs 2,919 crore without interest and bank charges and total outstanding amount along with liabilities were pegged at Rs 3,695 crore.

While both Kothari and Modi allegedly swindled banks, they are from very different worlds.

When Rotomac defaulted in payments, Bank of Baroda representatives visited companies suppliers and buyers. "It's wrong to say I'm not paying it (the loans) back", he told ANI on February 16. The CBI has also initiated a probe to find out if fake documents had been submitted to induce banks into advancing the money.

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