ED raids multiple locations in bank fraud case worth Rs 293 crore

Representational Picture

On Thursday, the Directorate of Enforcement conducted raids at various places at Pune, Ratnagiri, Sangli, and Nagpur in a Letter of Credit (LCs) fraud case which cost a Pune based bank a loss of Rs 293 crore. The Bank of India fraud case with regards to Letter of Credit (LCs) involves M/s Varron Aluminium Pvt Ltd (M/s VAPL) and M/s Varron Auto Comp Pvt Ltd (M/s VACL). The raids were conducted at factory premises and residential premises concerning Varron Group and its directors.

A case was registered with regards to the same by CBI, against VAPL and VACL and others on the basis of a complaint received from Bank of India (BOI), Pune Zonal Office wherein it was reported that VAPL has been maintaining a current account with Karve Road Pune Branch of Bank of India (BOI). Shrikant Pandhurang Sawaikar, who is one of the Directors of VAPL, is the principal responsible person for running the day to day activities in the company.

Sawaikar's company VAPL submitted LCs and bills drawn under the LCs issued by Canara Bank, Deccan Gymkhana Branch, Pune and the same were negotiated/discounted by BOI's Karve Road Branch. The bills were discounted by Bank of India after due verification of LC and acceptance of all the bills by the authorized officials of Deccan Gymkhana Branch of Canara Bank and the aggregate amount of Rs. 293 Crore was credited to the account of VAPL.

When the due date arrived, the Bank of India, Karve Road branch approached Canara Bank for the repayment of the dues. But to that surprise, Canara Bank informed that the purported LC was neither issued nor bills were accepted by their branch through the approved mode of Structured Financial Messaging System (SFMS) and thus they did not entertain repayment request of BOI. The same caused a major loss of Rs 293 crore to Bank of India.

The Directorate of Enforcement initiated an investigation under the provisions of the Prevention of Money Laundering Act, 2002, thereby taking cognisance of the bank fraud case complaint. During the investigation, it was revealed that VAPL director Sawaikar along with bank officials of Canara Bank and other private individuals entered into a criminal conspiracy to dupe Bank of India.

In pursuance to the said criminal conspiracy non-genuine Letter of Credit, commercial invoices and lorry receipts were used for release of Rs. 293 crores in the account of VAPL. Investigation under PMLA, 2002 so far has revealed that said money was immediately transferred through various accounts and finally utilized for settling old dues and making fixed deposits. Further investigation to establish the money trail and corresponding attachments is under progress.

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