An executive who used a bogus metals trading business to con banks out of hundreds of millions of pounds was jailed for nearly ten years today.

Virendra Rastogi, former chairman of RBG Resources, a London-based metals group that collapsed owing banks more than £300 million, was sentenced to nine and a half years at Southwark Crown Court.

Anand Jain, the RBG director with day-to-day control of the business, was sentenced to eight and a half years, while Guantam Majumdar, another senior executive, was sentenced to seven and a half years.

All three were convicted of one count of conspiracy to defraud in April, for which the maximum penalty is 10 years, although most prisoners are released after half their sentence. They were prosecuted following a three-year investigation by the Serious Fraud Office (SFO).

Today, Judge Wadsworth, QC, told the three they had committed a crime “of the utmost gravity” and engaged in “calculated dishonesty over several years”. The judge also criticised their decision to plead innocent that led to an eight-month trial that had “no doubt cost millions of pounds”.

Rastogi was disqualified from being a company director for 15 years. Jain and Majumdar were each disqualified for 10 years.

Jeremy Summers, a partner in the business & regulatory investigations group at law firm Russell Jones & Walker, said: "[Rastogi's] nine and half month term is close to the maximum sentence of 10 years.

"The SFO is keen to avoid trials through plea negotiation, and if Courts are willing to hand down this type of sentence when defendants plead not guilty it will send a strong message to people who might otherwise run the gauntlet."

Rastogi’s brother Narendra, who ran the American arm of RBG, was tried in the US earlier this year where he was sentenced to seven years for his part in the fraud.

During the trial, the court heard how RBG set up sham companies and produced false documents to secure loans from banks including Germany’s West LB and GMAC of the US to finance “imaginary” metal trades.

The scam remained undetected for several years because before a loan was due to be repaid, RBG would borrow a larger amount from another bank and use the new loan to pay off the previous one, pocketing the difference each time.

Using more than 300 fake companies, RBG produced documents that appeared to show the relevant deals had completed successfully.

More than £300 million was unaccounted for when RBG collapsed, none of which has been recovered.

The fraud began to unravel when a junior member of staff in Hong Kong accidentally faxed documents relating to six different RBG “clients” to the metal group’s auditors at PricewaterhouseCoopers.

An accountant raised the alarm after noticing that the six clients - supposedly based in three continents - had the same fax number. The prosecution told the court that the invented client companies used registered addresses that included small newsagents, flats on housing estates and a cowshed in India.

Paige Rumble, the Serious Fraud Office investigator who led the case, said: “This was a truly audacious and ruthlessly efficient fraud.”

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