Rotomac Director Rahul Kothari, Frost International’s CEO & MD Sujay Desai & Uday Desai Arrested By SFIO In Connection With An Alleged Scam Of Rs 7500 Crore Towards 14 State-Run Banks
New Delhi: The Serious Fraud Investigation Office (SFIO) has arrested Rotomac Group director Rahul Kothari and Frost International directors Sujay Desai and Uday Desai in connection with an alleged scam of Rs 7,500 crore caused to a consortium of 14 banks.
Uday Desai, who had not appeared before the investigative agency citing the coronavirus outbreak, was arrested late Wednesday night from Mumbai. “The trio was produced before a local court for transit remand. The SFIO had sought remand until March 23 owing to the pandemic. They have been granted transit remand until Saturday,” they will be taken to Kanpur. The probe revealed that in order to obtain funds from banks, the trio manipulated their financial statements. They were allegedly involved in round-tripping of funds by manipulating the merchanting trade scheme, and issued illicit debit notes to many overseas entities, which were under their control. The trio have been arrested under certain sections of the Companies Act, including those over fraud.
In February 2019, the government had asked the SFIO to probe into the affairs of 11 companies including Rotomac and Frost International. Kothari and the Desais had misused merchanting trade scheme for rotation of funds. Plus, they allegedly forged books of companies to attract banks and public financial institutions for obtaining credit facilities.
It is worth noting that Rotomac and Frost International have total outstanding dues of Rs 4,000 crore and Rs 3,500 crore towards 14 state-run banks against which they have defaulted.
Last month, the Central Bureau of Investigation (CBI) had lodged another FIR against Rotomac Exim for deceiving Allahabad Bank to the tune of Rs 36 crore. A CBI officer said that Allahabad Bank had sanctioned Rs 42-crore loan to Rotomac on October 3, 2010, but the company failed to pay the due amount with interest. The financial wrongdoings were detected when the CBI investigated the company’s transactions.
On February 23, 2019, Industrialist Vikram Kothari, the promoter of Rotomac Pens, and his son Rahul Kothari, were arrested on Thursday in Rs 3,700-crore loan default case. The CBI arrested the two after day-long questioning in Delhi.
The Kotharis allegedly owes Rs 3,695 crore to Allahabad Bank, Bank of India, Bank of Baroda, Bank of Maharashtra, Indian Overseas Bank, Oriental Bank of Commerce and Union Bank of India.
The Kotharis were questioned for the fourth consecutive day since the CBI filed the case against him and his family, and raided their residential and office premises in Kanpur in Uttar Pradesh. Vikram Kothari has denied any wrongdoing. “Yes, I took a loan from the bank but it’s wrong information that I haven’t paid,” he had said.
The CBI had filed case after getting a complaint against Vikram Kothari, his wife Sadhana and son Rahul, from the Bank of Baroda. Mr Kothari is the Chairman and Managing Director of Rotomac while his wife and son are Directors.
The Rotomac case coincides with the CBI’s investigation into the massive PNB scam in which bank officials helped Nirav Modi and others get credit from overseas banks using fake guarantees.
In February 2017, Mr Kothari was declared a wilful defaulter. He contested it in the Allahabad High Court and won but allegedly didn’t pay his dues. All through last year, various properties belonging to Mr Kothari and his family members were auctioned by banks in an attempt to recover some of their dues.
Despite his financial troubles, Mr Kothari hardly cut back on his opulent lifestyle. His sprawling ‘Santushti’ mansion and a fleet of luxury vehicles are well known in Kanpur.
Vikram Kothari’s father Mansukhbhai Kothari set up the ‘Pan Parag’ brand that became a huge success.
In 1999, the Kotharis split. Vikram Kothari took charge of the family’s stationery and pens enterprise while his younger brother Deepak Kothari took control of the Pan Parag empire.