According to sources, the CBI has charged Kanpur-based Rotomac Global and its directors with fraud in the Indian Overseas Bank for a total of Rs 750.54 crore.
The company, which was in the writing instrument sector, owes a consortium of seven banks, led by Bank of India, a total of Rs 2,919 crore. Indian Overseas Bank has a 23% exposure to this debt.
The company and its directors, Sadhna Kothari and Rahul Kothari, have been charged by the agency under many provisions of the Prevention of Corruption Act as well as IPC sections related to criminal conspiracy (120-B) and cheating (420).
On the basis of accusations from consortium members, the CBI and the Enforcement Directorate are already conducting numerous investigations against the company.
The Indian Overseas Bank said in their complaint to the CBI, which is now a part of the FIR, that the business was granted a non-fund-based limit of Rs 500 crore on June 28, 2012.
After a payment default, the account was classified as a non-performing asset on June 30, 2016, with an outstanding balance of Rs 750.54 crore.
In order to satisfy the company's foreign trade needs, the bank allegedly issued 11 Letters of Credit (LC), but all of them declined, totaling Rs. 743.63 crore, leaving the bank with no security.
A comprehensive set of documentation for the trade that the company conducted was not produced, and all LCs were issued in favour of two parties—Fareast Distributors and Logistic P Ltd and RBA Venture Ltd.
The bank asserted that the commerce vessel and voyages claimed in the bills of lading are not real because there is no supporting documentation.
The bank's forensic audit allegedly revealed account book manipulation and failure to disclose liabilities resulting from LCs.
The audit also uncovered errors in the relevant voyages, bills of lading, and sale contracts.
It noted that four parties owned by the same owner and group accounted for 92% of total purchases, totaling Rs 26,143 crore.
The forensic audit "significantly detected" a number of indicators that show the corporation didn't engage in any actual business transactions. A total of Rs 750.54 crore in financial damage and unjust gain to the corporation was reportedly caused by stealing money from the bank and syphoning it off fraudulently; this money has yet to be recovered from the accused.