ED searches at Pune in fraud case by Varron group, Bank of India and Canara Bank

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Pune, June 20, 2019 : The Directorate of Enforcement today conducted searches at various places at Pune, Ratnagiri, Sangli and Nagpur in a Letter of Credit (LCs) fraud case of Bank of India involving M/s Varron Aluminium Pvt Ltd (M/s VAPL) and M/s Varron Auto Comp Pvt Ltd (M/s VACL). The searches were conducted at factory premises, residential premises concerning Varron Group and its directors.

A case was registered by CBI, against M/s Varron Aluminiumm Pvt Ltd (M/s VAPL) and M/s Varron Auto Comp Pvt Ltd (M/s VACL) and others on the basis of complaint received from Bank of India (BOI), Pune Zonal Office wherein it is reported that M/s VAPL has been maintaining a current account with Karve Road Pune Branch of Bank of India (BOI). Shri Shrikant Pandhurang Sawaikar is one of the Directors of M/s VAPL and the principal responsible person for running the day to day activities in the company. M/s 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 the 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 M/s. VAPL. On due date, BOI approached Canara Bank for the repayment of the dues. Canara Bank informed that the purported LC was neither issued nor bills were accepted by their branch through approved mode of Structured Financial Messaging System (SFMS) and thus they did not entertain repayment request of BOI. The same has caused loss to the Bank of India.

Taking cognizance of these complaints, the Directorate of Enforcement initiated their own investigation under the provisions of the Prevention of Money Laundering Act, 2002. During investigation it was revealed that Mr. Shrikant Pandhurang Sawaikar along with bank officials of Canara Bank and other private individuals entered into a criminal conspiracy to cheat 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 M/s. 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.