3 directors of private firm arrested for Rs 4000-crore fraud

Bhawarlal Bhandari, Premal Goragandhi and Kamlesh Kanungo were arrested by Mumbai Police for cheating,forgery, breach of trust and criminal conspiracy.

The Hush Post: Acting on a complaint made by Axis Bank, the Economic Offences Wing of the Mumbai Police has arrested three directors of Parekh Alluminex Ltd. for cheating it of Rs 250 crore. Bhawarlal Bhandari, Premal Goragandhi and Kamlesh Kanungo were arrested for cheating,forgery, breach of trust and criminal conspiracy.

Axis Bank
Picture for representational purpose only.

While at present the fraud is being pegged at RS 250 crore, lenders are now stating that it could be as high as Rs 4,000 crore. Axis Bank is just one of the over 20 creditors of the company.

The arrested directors have been charged with floating fake invoices and manipulated bills through bogus companies to commit the fraud at the bank’s main branch, Fort, using letters of credit.

Again senior Axis Bank officials of the branch are also on the radar of the police. Axis Bank’s complaint has been filed against Parekh Alluminex Ltd (PAL) which names directors Amitabh Parekh (died in 2013), Rajendra Gothi, Devanshu Desai, Kiran Parikh and Vikram Mordani as parties to the fraud.

The Central Bureau of Investigation (CBI) is already investigating deals of Parekh Alluminex following complaints by public sector banks SBI and Indian Overseas Bank. These banks have alleged that the private company has been diverting funds to real estate developers. The company is also facing insolvency proceedings in the National Company Law Tribunal where a petition has been admitted.

In a unique modus operandi as per the police, the company initially took 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 `bogus’ minutes of a meeting of the firm’s board of directors which had actually not been held. This was done solely to induce the bank to sanction the credit. The bank got duped, sanctioned a letter of credit to PAL, which was meant to be used to buy raw material and equipment.

“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 Axis Bank.

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 found fake transport bills. Vivek Transport Company from Vapi, Gujarat, denied transporting goods for PAL (who had been named as the transporter by Parekh). Enquiries made 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.

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