A court in Mumbai has sentenced eight executives of a Indian textile firm and a chartered accountant to three years in jail for fraudulently obtaining letters of credit (L/Cs) and other trade finance facilities from state-owned Bank Baroda.

The defendants, who were all senior executives at a firm called Modern Denim, cheated the bank out of the equivalent of US$1.5 million.

Case history

The court heard that between 1994 and 2000, they forged several types of document, including bills of exchange, invoices, lorry receipts, export orders and overseas contracts and submitted these to a Bank of Baroda branch in the city of Ahmedabad.

On the basis of these documents, the bank granted them L/Cs and pre-shipment finance. It also provided foreign and inland bill discounting facilities to the convicted fraudsters.

Shell companies

The funds were purportedly for raw material purchases but were never used for that reason and instead were drawn in favour of eight shell companies.

The public prosecutor for India's Central Bureau of Investigation, Sandeep Kumar, told the court that these companies did not exist at the addresses documented on the L/Cs and on which the funds were drawn.

The convicted fraudsters were handed down relatively light sentences of three years in jail each on account of them all being senior citizens.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.