CBI books Electrotherm for cheating Central Bank of Rs436 crore
Company requested credit to enable it to supply steel and iron to an other firm in Tanzania, CBI says
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New Delhi: The Central Bureau of Investigation (CBI) on Tuesday said that it had registered a case against the directors of Ahmedabad-based Electrotherm (India) Ltd and officials of state-owned Central Bank of India for entering into a “criminal conspiracy” and cheating the bank to the tune of Rs.436.74 crore.
The case was registered on a complaint filed by the Central Bank of India. “It is further alleged in the complaint that the company requested for credit to enable them to supply steel and iron to one other firm in Tanzania,” CBI said in a statement.
A CBI official identified the Tanzania-based company in question is Kamal Alloys Ltd. CBI said that one of the directors in Electrotherm was also on the board of Kamal Alloys.
The agency conducted searches at nine places on Tuesday in Ahmedabad, Gandhinagar, Vadodara and Kutch in Gujarat.
Electrotherm “did not submit any proof of delivery of the material and defaulted on the loans taken”, the agency said. CBI further said that “standby Letters of Credit (were) opened by the bank to facilitate trade in machinery and coal devolved.” The bank had to make payment when Electrotherm did not pay the company it had taken the material from.
CBI has also alleged that Electrotherm made “false representations” to “induce the bank to extend credit facilities” to itself.
A company spokesperson could not be immediately reached for comment.
This is the latest in a string of cases involving public sector banks that CBI has begun investigating in the recent past.
On 2 August, CBI had arrested S.K. Jain, chairman and managing director of Syndicate Bank, allegedly for seeking a bribe to extend credit facilities to certain companies. In the same case, the CBI arrested 11 others, including Neeraj Singal, vice-president of Bushan Steel Ltd; Ved Prakash Agarwal, chairman-cum-managing director of Prakash Industries Ltd; and Pawan Bansal, a chartered accountant.
On 10 August, the CBI said that it was enquiring into IDBI Bank Ltd and Kingfisher Airlines Ltd, with an intention to look into the lender’s decision to sanction Rs.950 crore to Kingfisher Airlines at a time when the company had a negative net worth and negative credit rating.
IDBI Bank said later that it was not the target of the investigation. “The preliminary enquiry initiated by CBI a few months ago is against the borrower, KAL and not against IDBI Bank, as reported in the media,” IDBI Bank said in a statement to the stock exchanges on 12 August.
As of March 2014, the gross NPAs of 40 listed banks was Rs.2.42 trillion, up 34.41% from Rs.1.8 trillion a year ago. Data for all 40 banks for the quarter ended June 2014 is not yet available.