CBI heat on R2,919cr Rotomac loan default
BAD LOAN? Three premises raided in Kanpur after FIR; Kothari family questioned
KANPUR/LUCKNOW/NEWDELHI: Investigators from two federal agencies began questioning on Monday pen maker Rotomac’s director Vikram Kothari and his family members, fearing a fraud in the company’s default of loans of ₹2,919 crore borrowed from seven banks.
The Central Bureau of Investigation (CBI) filed a case at 4am against Kothari, his wife Sadhana and their son Rahul — all directors in Rotomac Global Private Limited — and unknown bank officials after a complaint from Bank of Baroda.
By the end of the day, the Enforcement Directorate (ED) too had jumped into the fray, launching a money laundering investigation against the Kotharis.
The case comes on the heels of a ₹11,400-crore alleged fraud in Punjab National Bank (PNB) in which celebrity jewellery designer Nirav Modi and his uncle Mehul Choksi are accused. The alacrity with which the CBI and ED have launched their investigation into the Rotomac case highlights the government’s desire to prevent a repeat of the PNB case.
Kothari himself answered the phone when a Hindustan Times reporter tried to reach him on Sunday and later, in a face-to-face meeting, spoke on record amidst rumours that he had, like Modi and Choksi, fled the country. “I am very much in Kanpur with my family, running my business here,” Kothari said on Sunday. “So far as the issue of loans is concerned, I have been in talks with banks for long. Three meetings have taken place with the banks. The matter is pending with the tribunal,” he added.
The issue seems to be one of default, although Kothari has a problem with that definition too. Kothari was declared a defaulter over a year ago and an FIR was lodged by the officials of the Indian Overseas Bank (IOB) after his cheques worth ₹600 crore bounced, which Kothari denied. “Show me one cheque of mine that has bounced. This is slanderous. I believe in the judicial system,” he said.
An officer in the CBI seemed to think it could be more. He said that the Kotharis allegedly used fake documents and received credit for exports that they round-tripped through an offshore firm without actually carrying out a trade.
“The questioning of Kothari, his wife and son is on. The agency has also sealed a residential premises and an office of Rotomac directors in New Delhi,” a CBI spokesperson said on Monday. The ₹2,919-crore figure does not include interest, the spokesperson added, saying the total liability could amount to ₹3,695 crore. Earlier in the day, the CBI teams searched Kothari’s office in Kanpur’s City Centre Mall Road, a factory in Dada Nagar Industrial Estate and a farmhouse in Bithoor.
The five-member team that raided Kothari’s house reportedly seized passports and mobile phones of family members. A team of experts was going through the computers of Kotharis. “The team is questioning the Kotharis since early morning. House staff have not been allowed to move out. The police have been called in to take over the security of the house,” a guard said, requesting not to be named.
Kothari was yet to be arrested by Monday evening, according to another officer in the CBI, who asked not to be named. This officer added that Kothari’s associates in his real-estate business may also be questioned.
Deputy SP, CBI, AR Tripathi before leaving Kothari’s residence late Monday evening said the investigation was going on and the CBI would come back on Tuesday.
SP crime Rajesh Yadav said the local police have been deployed at Kothari’s residence. The family members would not be allowed to leave till investigation was over, he said.
Rotomac was declared a wilful defaulter last year and banks had begun the process of attaching Kothari’s assets. Some banks have auctioned a few properties while others are preparing to take over a nearly 21,000 sq metre piece of land in Dehradun, Uttarakhand. According to bank officials, Kothari was given loans by IOB (₹1,000 crore), Bank of India (₹1,365 crore), Union Bank of India (₹485 crore), Bank of Baroda (₹600 crore), and Allahabad Bank (₹352 crore).
They said he defaulted on interest and principal payments.
On April 13, 2017, a court asked Rotomac to produce the details of properties and instalments it had paid to Bank of Baroda. The company responded by saying that despite the bank being offered properties worth ₹300 crore for settlement, it marked the company as defaulter.
Counsel Archana Singh, who represented Bank of Baroda in that case, claimed that Kothari had to clear dues to the tune of ₹550 crore and that he was diverting funds to other companies to escape repayment.