Reports are emerging in the Gulf media that suspected letter of credit (L/C) fraudster Madhav Patel has been apprehended by the Indian authorities.

Patel, who was once a respected metals trader in the Gulf, has been wanted for several years by authorities in the Gulf, the UK and India for multi million dollar L/C frauds that allegedly cost banks, mainly in the Gulf, around US$200 million.

Successful business

Patel ran the apparently successful Solo Industries and Zeeba Metals businesses, which acquired a good credit record amongst Gulf banks that were prepared to lend the companies substantial sums of money.

But the metals trader's businesses ran into trouble in the late 1990s, and the businessman allegedly turned to fraud to maintain his wealth.

No shipments

The Iranian-educated trader continued to open L/Cs to export metals on the basis of his good credit rating, but no goods were delivered against the L/Cs he opened.

Patel was able to grow this alleged fraud into one of the largest on record, because he also controlled the businesses that were supposedly importing metals into the UK as well as the exporting companies in the Gulf.

Banks affected

The scheme snowballed and when it all collapsed in April 1999, more than 20 banks in the Middle East were affected.

These included the Arab Banking Corporation, Arab-African International Bank, Emirates Bank International, Gulf International Bank, Credit Agricole Indosuez and the Albarka Islamic Investment Bank.

Arrests

According to reports, Patel was arrested in Mumbai some time in January this year.

During his interrogation, he reportedly revealed the address of his absconding father, who is also wanted for questioning by authorities in the Gulf and the UK.

Extradition request

The UAE authorities have reportedly applied to India for Patel to be extradited to the UAE to face charges there.

In May 1999, the UK authorities arrested and jailed for two years Milton Kounnou, the London-based import agent for Solo. Patel has not been seen for eight years.

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