Friendly play between banks and Rotomac: Debt tribunal
, TNN|
Feb 25, 2018, 11.18 AM IST
Seven months before Rotomac fraud came to light, Allahabad’s debt recovery tribunal (DRT) had detected the alleged misuse of credit facilities by the Kanpur-based businessman Vikram Kothari and his firms Rotomac Global and Rotomac Exports. In its July 1, 2017 report, the DRT had pegged the total recoverable amount at Rs 4,290 crore.
The tribunal also pointed fingers at “the friendly play” between banks and the penmaker’s private companies. It pinned the blame on Indian Overseas Bank (IOB) and some other banks of colluding with Rotomac companies.
“I am of the opinion that because it is a friendly play between the bank and the borrower and there is ample evidence on record that the bank has facilitated the borrowers with all accommodations and even after commission of default, applicant bank was considering and exploring ways to give more credit facilities to the borrowers and further bank has failed to disclose money advanced to a 100% owned subsidiary of defendant company in Singapore,” said order by Allahabad DRT.
“If competent authorities conduct forensic audit more things will come out to unearth modus operandi and mismanagement of public funds to facilitate financing to the convenience and dictates of borrowers,” says the tribunal order.
The tribunal held that the banks had concealed letters deliberately: first, to help the defendants and second, to hide its own conduct regarding entertainment of proposals for enhancement of credit facilities despite chronic default. “It appears that bank has filed this appeal as an eyewash, without any intention to install and institute required action against defaulters just to save its own employees. It is a clear case of window dressing,” says the tribunal order.
The tribunal expressed shock on the issue of “letters of credit in a short span” to the Rotomac firms, saying the “banks enhanced the credit facilities by reducing margin in a clandestine manner”.
It also said that “it is astonishing that bank has granted huge credit facilities to defendants without any securities and just on personal guarantee”.
TOI has accessed the tribunal’s order and affidavits submitted by the consortium of seven banks as well as Kothari last year. The tribunal said that no collateral scrutiny was provided by the Rotomac owners or any individual and the banks offered them line of credit (LC) just on personal guarantees of directors.
The tribunal also pointed fingers at “the friendly play” between banks and the penmaker’s private companies. It pinned the blame on Indian Overseas Bank (IOB) and some other banks of colluding with Rotomac companies.
“I am of the opinion that because it is a friendly play between the bank and the borrower and there is ample evidence on record that the bank has facilitated the borrowers with all accommodations and even after commission of default, applicant bank was considering and exploring ways to give more credit facilities to the borrowers and further bank has failed to disclose money advanced to a 100% owned subsidiary of defendant company in Singapore,” said order by Allahabad DRT.
“If competent authorities conduct forensic audit more things will come out to unearth modus operandi and mismanagement of public funds to facilitate financing to the convenience and dictates of borrowers,” says the tribunal order.
The tribunal held that the banks had concealed letters deliberately: first, to help the defendants and second, to hide its own conduct regarding entertainment of proposals for enhancement of credit facilities despite chronic default. “It appears that bank has filed this appeal as an eyewash, without any intention to install and institute required action against defaulters just to save its own employees. It is a clear case of window dressing,” says the tribunal order.
The tribunal expressed shock on the issue of “letters of credit in a short span” to the Rotomac firms, saying the “banks enhanced the credit facilities by reducing margin in a clandestine manner”.
It also said that “it is astonishing that bank has granted huge credit facilities to defendants without any securities and just on personal guarantee”.
TOI has accessed the tribunal’s order and affidavits submitted by the consortium of seven banks as well as Kothari last year. The tribunal said that no collateral scrutiny was provided by the Rotomac owners or any individual and the banks offered them line of credit (LC) just on personal guarantees of directors.
(This article was originally published in The Times of India)
