Pramesh S Jain
The Directorate of Enforcement (ED),Bengaluru Zonal Office, has arrested Karuturi Venkateshwara Rao, Managing Director of M/s Deepak Cables (India) Limited, in connection with an alleged Rs.899.35-crore bank fraud involving a consortium of banks led by the State Bank of India (SBI).
Following his arrest on June 2 under the Prevention of Money Laundering Act (PMLA),2002,a special court in Bengaluru remanded him to 10 days of ED custody.
The ED said it had sufficient material to believe that Rao was involved in the offence of money laundering under Sections 3 and 4 of the PMLA.
Investigators alleged that he generated proceeds of crime and subsequently layered and integrated the funds through multiple bank accounts linked to entities operated and controlled by him.
The money laundering probe stems from a CBI case registered against Deepak Cables India Ltd,Rao and others for allegedly cheating a consortium of banks to the tune of Rs.899.35 crore.
According to the agency,the company obtained substantial credit facilities from banks and diverted the funds while submitting falsified financial statements and manipulating its books of accounts to secure and continue availing loans.
The ED investigation revealed that the accused allegedly used a network of entities to create fictitious sales and purchases,engage in circular trading and issue fake corporate guarantees.
These transactions were allegedly used to inflate turnover,enhance drawing power from banks, evergreen existing loans and divert funds through related companies and personal accounts to conceal their origin.
Investigators also found that large amounts of loan funds were transferred to entities allegedly controlled by Rao without any legitimate business rationale.
The diverted funds were allegedly routed through various channels in an attempt to disguise their illicit nature.
Earlier searches conducted in the case resulted in the seizure of gold jewellery and cash worth Rs.1.27 crore, while bank accounts holding balances of about Rs.18 crore were frozen.The ED said further investigation is underway.
