Two persons from Hyderabad, Khagesh Kachhwal and Varanasi Dileef, were arrested by the Enforcement Directorate (ED) authorities for allegedly aiding and abetting money launderers accused of involvement in bank fraud cases.
The ED took up investigation into a money laundering case based on a First Information Report issued by Central Bureau of Investigation’s Chennai branch against a company called RE Cables and Conductors Private Limited (RECC). The charge against RECC was that it had misappropriated loan secured from State Bank of India causing ₹74.83 crore loss to the latter.
According to ED officials, the arrested duo allegedly had number of shell entities under their control. The RECC company created several Letters of Credit (LCs) on the names of shell companies operated by the arrested persons under the guise of short term advance using bogus documents.
Actually, no materials or goods were supplied against the LCs by RECC. Later, the LCs were discounted with a known bank. The amount thus received was again reverted to RECC to ensure it managed the cash flow crunch, said the ED authorities in a statement.
As the RECC did not make payments to the bank, the LCs got devolved and eventually caused loss to the bank. Khagesh Kachhwal and Dileef reportedly admitted to the investigators that they had been providing these ‘services’ by taking 0.25% of the total transaction amount as their commission.
They had also reportedly confessed to have provided similar assistance to many business houses facing loan fraud charges. Such business entities included Golden Jubilee Hotels, VNR Infra Private Limited and Transstroy India Limited.
Bogus entries of such business houses were running into several hundres of crores of rupees transactions. The two arrested persons were taken into custody from judicial remand for further questioning.
