New Delhi/Madurai, Jul 19: The Central Bureau Of Investigation on Monday conducted searches in three cities at the premises of Paramount Airways, its Managing Director and the then Chairman of Oriental Insurance Company in connection with alleged irregularities in distribution of credit insurance cover to the air carrier.
The searches were conducted by the Economic Offences Wing of the agency at six places in Mumbai, Chennai and Madurai including at the offices of Paramount Group, residence of its MD M Thiagarajan, offices of Oriental Insurance and residence of its former Chairman M Ramadoss who is now the Chairman of The New India Assurance, agency sources said.
The case relates to alleged irregularities between Rs 14-25 crore in credit insurance given by Oriental Insurance to Chennai-based Paramount Aiways in 2008-09 for its multiple bank guarantees to cover fuel purchases, they said.
Credit insurance, now banned by Insurance Regulatory Authority of India, is taken by a company to cover its dues and in case it fails to repay them banks recover it from the insurance companies.
CBI has alleged that Ramadoss entered in a criminal conspiracy with the Paramount officials in the distribution of these credit insurances which were in violation with the existing rules and regulations, the sources said. Paramount Airways had taken about Rs 400 crore loan from five major banks to make payments to oil companies but allegedly defaulted in repaying the amount. These five banks had sent claims to Oriental Insurance which had allegedly issued the credit insurance to the airline, they said.
The planes of Paramount Airways were de-registered in 2010, following which they could not operate their flights. A legal battle is on. PTI