BENGALURU: The Directorate of Enforcement (ED), Bengaluru Zonal Office has arrested Karuturi Venkateshwara Rao, Managing Director of Deepak Cables (India) Limited (DCIL), under section 19 of the Prevention of Money Laundering Act, 2002 on Tuesday, as part of the investigation in the case of DCIL and others in the matter related to defrauding consortium of banks led by SBI.
ED initiated a probe based on an FIR registered by CBI against DCIL, its MD, and others, for allegedly cheating a consortium of banks to the extent of Rs 899.35 crore by obtaining large credit facilities and diverting the loan funds. The company allegedly submitted falsified financial statements and manipulated books of accounts to secure and continue availing bank loans.
ED further revealed that the accused used multiple entities for fictitious sales and purchases, circular trading, and issuance of fake corporate guarantees.
These transactions were utilized to artificially inflate turnover, increase drawing power from banks, evergreen existing loans, and divert the Proceeds of Crime through related companies and personal accounts, thereby concealing their illicit origin.
It was also found out that huge amounts of loan funds were diverted to the related entities under the control of Rao without any business rationale and doubtful purpose, according to a press release from ED.
On the basis of material in possession there were sufficient reasons to believe that Rao is guilty of the offence of money laundering; that he generated the POC; layered and integrated the funds by using various bank accounts belonging to entities operated and associated with him. Therefore, Rao was arrested and was produced before the Special Court, Bengaluru and Court granted 10 days custody of Rao to ED.
Earlier, in this case searches were conducted wherein gold jewellery and cash amounting to Rs.1.27 Crore were seized and bank accounts having balance of Rs. 18 Crore were frozen.