Another Nirav Modi in making? Rotomac Pen's Rs 8 bn defaulter flees country

Vikram Kothari Photo: Rotomac Website

After billionaire diamantaire Nirav Modi, another defaulter Vikram Kothari, the promoter of Rotomac Pens, has also allegedly gone abroad after swindling Rs 8 billion from various public sector banks, including Allahabad Bank, Bank of India, and Union Bank of India, sources said.

The Kanpur-based company’s owner had taken a loan of more than Rs 8 billion from over five state-owned banks.

Allahabad Bank, Bank of India, Bank of Baroda (BoB), Indian Overseas Bank, and Union Bank of India compromised their rules to sanction loans to Rotomac, the sources said.

According to local media reports, the promoter said speculation of his fleeing the country is baseless. “I am a resident of Kanpur and I will stay in the city. However, I do have to travel to foreign countries for business purposes,” Kothari said.

Kothari took a loan of Rs 4.85 billion from Mumbai-based Union Bank of India and a loan of Rs 3.52 billion from Kolkata-based Allahabad Bank. A year later, Kothari has reportedly not paid back either the interest or the loan.

Last year, BoB, a consortium partner, declared pen manufacturer Rotomac Global a “wilful defaulter”. The company moved the Allahabad High Court seeking removal of its name from the list of wilful defaulters.

A division Bench comprising Chief Justice D B Bhosle and Justice Yashwant Verma had passed the order on a petition filed by the company, contending it has been wrongly declared a “wilful defaulter” by BoB despite having “offered assets worth more than Rs 3 billion to the bank since the date of default”.

Rotomac was declared a wilful defaulter vide an order dated February 27, 2017, passed by an authorised committee, according to the procedure laid down by the Reserve Bank of India.

The development comes less than a week after Punjab National Bank (PNB) had detected a $1.77 billion (about Rs 114 billion) scam wherein Modi allegedly acquired fraudulent letters of undertakings (LoUs) from a branch in Mumbai to secure overseas credit from other Indian lenders.

The PNB fraud pertains to issuance of fake LoUs to companies associated with billionaire jeweller Nirav Modi by errant PNB employees, which enabled these companies to raise buyers’ credit from international branches of other Indian lenders.

Last month, PNB had lodged a first information report with the Central Bureau of Investigation stating that fraudulent LoUs worth Rs 2.8 billion were first issued on January 16. At the time, PNB had said it was digging into records to examine the magnitude of the fraud.

In the complaint, PNB had named three diamond firms — Diamonds R Us, Solar Exports, and Stellar Diamonds — saying they had approached it on January 16 with a request for buyers’ credit for making payment to overseas suppliers.

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