The Enforcement Directorate (ED) has intensified its investigation of the Rs 899.35 crore bank fraud of Deepak Cables (India) Limited, with the arrest of its director Karuturi Venkateshwar Rao. The arrested official of Bengaluru Zonal Office of the ED is the first in a long-running money laundering investigation of a huge loan fraud scam involving a banking consortium in the SBI.
Rao was arrested and brought to court for further interrogation in a special court, and the ED held him in custody for 10 days. He will be questioned about the possible diversion and misuse of bank money from different financial institutions.
The latest development comes weeks after the Enforcement Directorate conducted extensive searches at the premises of Deepak Cables (India) Limited. The raids were carried out on May 19 and May 29, and assets worth several crores of rupees were seized. The officials retrieved cash and frozen bank accounts with about Rs 18 crore.
The ED said Deepak Cables received large loans from a consortium of banks led by the State Bank of India (SBI) and then diverted them for purposes other than those sanctioned. It is believed that money was transferred through various entities and transactions in violation of banking regulations and loan agreements.
The agency is going to look at financial records, transaction records, company documents and digital evidence from the searches to determine how many irregularities there are. The fraudulent diversion of funds could have caused large losses to the lending institutions involved, the officials said.
The case was initially under scrutiny after the CBI filed a First Information Report (FIR) against the company and key officials. Based on the CBI investigation, the Enforcement Directorate initiated a separate investigation under the Prevention of Money Laundering Act (PMLA).
For now, the ED is still trying to figure out who the beneficiaries of the diverted funds are and trace the assets that were bought with the proceeds of the alleged crime, officials said. The agency is also looking into the role of other people or entities in moving and using the loan amount.
The alleged fraud has received attention in particular because of its size and because of the consortium of major banks. Large corporate loans were at the centre of recent investigations into financial fraud that have taken on huge proportions as governments sought to recover money and hold people responsible for the fraud.
With the arrest of Karuturi Venkateshwar Rao, investigators will get better insight into the financial transactions and business operations of Deepak Cables (India) Limited. The ED is also likely to follow up on the evidence found during the custodial interrogation and take further action based on it.
The investigation is on, and all aspects of the alleged Rs 899.35 crore fraud will be thoroughly investigated before any further legal action is initiated.
