The police have arrested three directors of a private firm as part of ongoing investigations into a bank fraud by Parekh Alluminex Ltd (PAL) against which lenders are now claiming close to Rs 4,000 crore.
Bhawarlal Bhandari, Premal Goragandhi and Kamlesh Kanungo were arrested by the economic offences wing on Friday for cheating, forgery, breach of trust and criminal treason following a complaint by Axis Bank against the firm for cheating it of Rs 250 crore.
Axis Bank is component of a group of over 20 creditors with exposure to the company. Those arrested on Friday are charged with floating fake invoices and manipulated bills through bogus companies to commit the fraud at the bank’s main branch, Fort, utilizing letters of credit.
Police haven’t ruled out the role of bank officials in the case. Axis Bank’s complaint against Parekh Alluminex Ltd (PAL) also mentions directors Amitabh Parekh (died in 2013), Rajendra Gothi, Devanshu Desai, Kiran Parikh and Vikram Mordani.
Parekh Alluminex is already facing investigations by the CBI following a complaint by public sector lenders, including SBI and Indian Overseas Bank. Lenders have accused the private company of diverting funds to real estate developers. The company is now facing insolvency proceedings in the National Company Law Tribunal where a petition has been admitted.
The police said PAL initially availed of three short-term loans totalling Rs 125 crore from Axis Bank, which it repaid to “gain confidence”.
In 2011, PAL, led by Parekh, approached the private 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 bank sanctioned a letter of credit to PAL, which was meant to be used to buy raw material and instrument.
“Our exposure is part of a lending arrangement involving around 22 banks and the bank has filed an FIR with the EOW, post declaring the concerned exposure as fraud. We are fully cooperating with the investigating authorities,” said an Axis Bank spokesperson in response to a query.
The police said that Parekh and the others diverted it to Parekh’s personal account, repaid dues and settled bank loans. “In 2012, PAL showed Axis Bank that it bought aluminium foils worth Rs 49 crore from a company, 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. During scrutiny, we found the stated address of SFAPL in Bhiwandi to be bogus,” said an officer probing the case.
The police then stumbled upon fake transport bills. The company mentioned by Parekh, Vivek Transport Company from Vapi, Gujarat, denied transporting goods for PAL; questions to the RTO revealed that the truck numbers mentioned on the bills were of two-wheelers. The amount of Rs 50 crore was circulated through PAL and three shell companies, Bhogyoday Fero Alloys, Bhumika Foils and Bhusan Foils. The amount was diverted to settle PAL’s loans.
In 2013, Axis Bank downgraded its one-time letter of credit facility from Rs 89 crore to Rs70 crore. The same year, PAL showed the bank it wanted to buy aluminium foils worth Rs 70 crore from Trisons Metalex Pvt Ltd (TMPL).
PAL nominated two employees, Santosh Wavdankar and Dinesh More, as authorised signatories for transactions after Parekh’s death.
For encashing two letters of credit, TMPL submitted tax invoices and delivery challans to the bank to show that it supplied goods worth the stated amount to PAL. During scrutiny, the bank found that no such company existed at the stated Kalamboli, Raigad, address. Dada Transport Service, through which the goods were shown transported, was found to be bogus. The police found that the invoices and challans were prepared by Bhandari, Kanungo and another PAL director, Vijay Jain. “The trio utilized to visit Axis Bank to follow up on the letters of credit. The money was transferred to a firm, Sikkim Ferro Alloys Pvt Ltd, which utilized it to settle a loan in the same bank,” said a police officer.
Explaining the relations among the three PAL directors arrested, the officer said, “Bhandari was also a director at TMPL, which received Rs 70 crore, and acted at the behest of Kanungo. Goragandhi was a director at SFAPL, which received Rs 50 crore. Kanungo was a director at both TMPL and SFAPL. All three caused a massive loss to Axis Bank.”