3 directors of Mumbai co. held for Rs 4,000 crore bank fraud

MUMBAI: 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 conspiracy following a complaint by Axis Bank against the firm for cheating it of Rs 250 crore.

Axis Bank is part 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, using 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 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 an Axis Bank spokesperson in response to a query.