India's Central Bureau of Investigation (CBI) has raided several premises, including those of Delhi-based Jay Polychem India in connection with allegations that they fraudulently obtained letters of credit (L/Cs) to cause losses of a total of the equivalent of around US$270 million to a consortium of 13 banks.

Investigations were sparked after several banks had to settle L/Cs with sellers of goods after purchasers within an increasingly noticeable network of companies defaulted.


The CBI alleges that the companies falsified the value of inventories and debtors to manipulate their accounts so that they could obtain L/Cs.

Examination of Jay Polychem's accounts revealed that the value of debtors reduced from the equivalent of US$218 million in 2015 to just US$102 million in 2016.

Accounting hole

But there was no trace in the accounts to indicate where the US$116 million difference had gone. The accounts showed that amount had not been received, neither had it had it been written off as bad debts.

Bank statements meanwhile revealed that over that period the firm received cash equivalent to just US$44 million.

Shell companies

Further inquiries revealed that several companies shown to have been debtors appeared to be shell companies and their offices could not be located.

Inquiries also revealed that the L/Cs were issued to potentially suspicious parties.

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