CBI registers FIRs against Mumbai-based firm for Rs 388 cr bank loan fraud

New Delhi [India], August 23 (ANI): The Central Bureau of Investigation has registered two separate cases against Mumbai-based Varun Industries Ltd for allegedly defrauding two public sector banks for an amount to the tune of Rs 388.17 crore.

The agency has registered a case against Kiran Mehta and Kailash Agarwal, promoters and directors of Varun Industries Ltd (VIL).

In the first case CBI received a complaint against VIL for defrauding the Central Bank of India to the tune of Rs 269.29 crore. The allegations in the complaint revealed that the accused company had availed various credit facilities from the Central Bank of India in a consortium led by Indian Bank, with a total sanctioned working capital-term loan limit of Rs 292.15 crore in September 2011.

Out of the said limits, a term loan of Rs 19.45 crore was sanctioned outside the consortium for a windmill power project at Jaisalmer.

The complaint further revealed that the company did not remit export payment received from the sale of goods received under the Letter of Credit to meet the import Leg of Merchant Transaction.

The merchant trade LC was issued by the bank on the request of the company. It is further alleged that the transactions under this head were dishonestly intended to siphon out the funds from the banking channel.

It was also revealed from the complaint that the company had discounted export bills or obtained advances against export bills sent for collection to its associate companies, namely Al Rad International Trading Est. UAE and White Impex General Trading LLC, UAE did not honour the bills and later on, wrote off the same in its books.

Varun Industries Ltd and its group companies were found to be not only supplying to these two UAE-based companies. The outstanding amount from these two companies significantly increased year on year from 2009 to 2012. It is suspected that these entities have been used as a conduit to siphon the funds out of the banking channel with the dishonest intention of not repaying the funds.

Another case has been registered for defrauding e-Syndicate Bank (Now Canara Bank) to the tune of Rs 118.88 crore.

The complaint further revealed that the accused company had availed Packing Credit Limit (PCL) facilities for export of steel and kitchenware items but It was revealed that at least on three occasions the beneficiaries of PCL were not dealing with the steel and kitchenware items. The total amount involved in the three PCL was Rs 116.70 crore.

It is suspected that the proceeds in the said PCL facilities were diverted to other activities.

It is also pointed out in the complaint that the accused company was mainly dealing with two companies in Dubai, namely Al Rad International Trading and White Impex General Trading LLC, and most of the sale turnover was with them only.

It is further alleged that the accused company and its group companies were the only suppliers of these two Dubai-based companies.

Criminal misconduct of public servants is suspected since PCL beneficiaries were not dealing with the steel and kitchenware items, though the packing credit was opened for the same.