Report on the ROTOMAC GROUP SCAM

(by Kareena Mandal)

Rotomac Global Private Limited, an unlisted private company established on August 3, 1992,
consisting of 3 CEOs, one of them Vikram Kothari. Rotomac Group is currently under liquidation and
operates as a private limited company situated in Uttar Pradesh.

The Rotomac Group scam implicated Vikram Kothari, the promoter of Rotomac Global Pvt Ltd, for
carrying out fraudulent activities with multiple public sector banks, notably Bank of Baroda’s
(BoB’s), from 2008 to 2013. Kothari manipulated the system by securing foreign letters of credit
(FLCs) apparently for export and import but misused these funds for personal purposes, leading to a
significant fraudulent scheme.

The key events and modus operandi can be summarized as follows:

1. Key Events

• Rotomac Group Pvt. Ltd. sought credit from 7 banks, including Bank of
Baroda’s, (BoB's) international business branch at The Mall, Kanpur, for import-
export activities from 2008 to 2013, ranging from Rs 15 crore to Rs 200 crore.

• Instead of using the funds for their intended purposes, Rotomac diverted the
money to its accounts and sister companies.

• Roughly Rs. 15.50 crore, meant for executing export orders, was rerouted
through RTGS to Rotomac's alternate accounts.

• Likewise, the Bank of Baroda provided about Rs. 34 crores as packing credit for
an export order supposedly for 15,700 tonnes of wheat delivery to Starcom
Resources PTE Singapore, but the funds were transferred to the accounts of
Bargadia Brothers Pvt Ltd.

• Vikram Kothari conducted trades using incomplete or photocopied documents,

providing the same to banks, claiming original papers were sent to the importers.

• The majority of documents, as per CBI claims, were sourced from overseas
centers, shell companies, and non-existent entities in places like Dubai, Sharjah,
and Hong Kong, and were allegedly dubious, raising concerns about the
authenticity and completeness of the transactions.

• Bank of Baroda lodged a complaint with the CBI, accusing Rotomac of violating
Foreign Exchange Management Act rules, misusing sanctioned packing credit,
and engaging in deceptive practices, highlighting the involvement of Kothari in
alleged fraudulent activities.

• Additionally, BoB claimed that Rotomac conducted sales through one company
and purchases through another, thereby manipulating the transactions.
 2. Modus Operandi and Corporate Links

• Rotomac Global Pvt Ptd, engaged in intermediary trades and manufacturing of

pens, sought funds from banks for export and import transactions but instead
transferred the funds to its alternate accounts or sister companies.

• The documents they provided to the banks were either incomplete or comprised
photocopies of bills of loading and other transactional documents.

• Rotomac claimed that the original papers had been dispatched to the importer.
However, upon tracing these documents to overseas centers, it was revealed that
they failed to substantiate valid trade transactions.

• They conducted their operations using shell companies and inadequately

equipped businesses. Investigations by CBI uncovered that the supposed business
addresses were frequently non-operational or managed by a sole office assistant.

• Rotomac’s foreign companies were either non-existent or untraceable entities,

situated in locations such as Dubai, Sharjah, and Hong Kong.

• BoB claimed that Rotomac conducted sales through one company and purchases
through another, thereby manipulating the transactions.

In assessing the current situation and arriving at a conclusion, let's examine the following:

➢ Conclusion

• With all the above-mentioned points we can conclude that The Central Bureau of
Investigation (CBI) booked Rotomac Global Pvt Ltd and Vikram Kothari for engaging in
fraudulent activities, misappropriation of credit/funds, and violation of the Foreign
Exchange Management Act rules. Many FIRs were lodged against Rotomac for
defrauding the banks and criminal conspiracy.

➢ Current Status

• Rotomac account became a non-performing asset as of June 30, 2016, due to a payment
default, accumulating an outstanding amount of Rs 750.54 crore (exact figure may vary).
The current status of the legal proceedings involves ongoing investigations, possible legal
actions, and efforts to recover misappropriated funds.

The options to mitigate future recurrence could be as follows:

• Granting credit approval following a meticulous and thorough verification of the

authenticity of the submitted documents.
 • Verifying the documents by cross-referencing with the mentioned entities as well as
external sources, such as trade partners, industry databases, or government agencies.

• Thorough physical verification by banks of overseas centers and companies, including

validation of transactions with all involved parties.

• Enhancing regulatory supervision and enforcement by financial institutions, ensuring

more rigorous examination of transactions related to high-value credits in import-export
operations.

• Implementing a training program to ensure bank employees are knowledgeable about

deceptive and fraudulent practices and are also aware of the red flags and suspicious
patterns in loan applications.

In wrapping up the report on the Rotomac Group scam, it is evident that this case emphasizes the
critical requirement for enhanced verification protocols to be implemented by financial institutions
and regulatory bodies.