Three directors of Mumbai-based firm arrested over Rs 4,000 crore alleged bank fraud

Acting on an Axis Bank's complaint, the Economic Offences Wing of Mumbai police on Friday arrested three directors of a private firm - Parekh Alluminex Ltd or PAL - for allegedly defrauding banks of Rs 4,000 crore. Axis Bank is one of the 20 creditors who lent close to Rs 4,000 crore to PAL.

Axis Bank's exposure to the entire loan was Rs 250 crore for which the bank had filed a complaint with Mumbai police. On Friday, the police nabbed three directors - Bhawarlal Bhandari, Premal Goragandhi and Kamlesh Kanungo - of PAL for cheating, forgery, breach of trust and criminal conspiracy.

Axis Bank in its complaint had mentioned five other PAL directors: Amitabh Parekh (died in 2013), Rajendra Gothi, Devanshu Desai, Kiran Parikh and Vikram Mordani. The arrested directors have been charged with floating fake invoices and manipulated bills through bogus companies to commit fraud using letters of credit, the Times of India reported.  

According to the report, in 2011, PAL approached the Axis Bank for working capital of Rs 127.5 crore. "Parekh submitted minutes of a meeting of the firm's board of directors, though no such meeting was held. He did this solely for inducing the bank to sanction credit," the report added. Later, the bank issued a letter of credit to PAL. However, the bank money was diverted to then PAL director Amitabh Parekh's personal account.  

In 2012, PAL showed Axis Bank that it bought aluminium foils worth Rs 49 crore from Suryakiran Ferro Alloys Pvt Ltd (SFAPL), whose directors were stated as Goragandhi and his wife Bhumika.  SFAPL submitted documents for encashing a letter of credit worth Rs 50 crore. It submitted bills showing goods supply to PAL. However, during scrutiny, police found the stated address of SFAPL in Bhiwandi bogus, the TOI report said.  

Axis Bank isn't the only lender to complain against the PAL. The State Bank of India and Indian Overseas Bank have also filed a case against PAL in the CBI, accusing the Mumbai-based firm of diverting funds to real estate developers.