Bengaluru: The Enforcement Directorate has arrested K. Venkateswara Rao, a director associated with Deepak Cables (India) Limited, in connection with an alleged ₹899 crore bank fraud case. Investigators allege that the company obtained credit facilities from a consortium of banks through misleading financial records and later diverted funds to related entities.
Banks Allegedly Suffered Heavy Losses
According to investigators, the case relates to alleged losses of about ₹899.35 crore suffered by a consortium of lenders led by the State Bank of India. Authorities claim the company concealed its actual financial condition and submitted misleading statements to secure and continue large credit facilities.
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The ED recently conducted searches at locations linked to the company and its associates in Bengaluru and elsewhere. During the searches, officials reportedly recovered incriminating documents, financial records and digital evidence connected to the alleged fraud.
The agency also seized assets, including cash and gold jewellery valued at around ₹1.27 crore. Bank accounts holding nearly ₹18 crore were frozen as part of the continuing investigation.
Circular Trading And Fund Diversion Under Probe
Investigators allege that Deepak Cables and related entities used a series of transactions to create a misleading picture of the company’s business operations. Several firms were allegedly used to generate fictitious sales and purchase transactions.
Authorities suspect that circular trading, paper transactions and questionable corporate guarantees were used to inflate turnover figures and improve the company’s creditworthiness before lenders. The probe also suggests that a significant portion of the borrowed funds may have been diverted to companies and entities directly or indirectly linked to the accused.
Officials claim several transactions lacked clear commercial purpose, raising suspicion that the movement of funds was intended to conceal their final destination.
Investigators Trace Wider Financial Network
The alleged fraud is believed to have developed over several years before irregularities in financial records drew scrutiny. Banking institutions reportedly began reviews after concerns emerged over loan utilisation, repayment performance and discrepancies found during forensic audits.
Financial crime investigators are now examining a network of transactions involving multiple entities, bank accounts and individuals. Authorities are reviewing banking trails, company records and communications to determine how the funds were routed and whether additional beneficiaries were involved.
The ED is continuing its investigation into the roles of company officials, associates and related business entities. Officials believe further interrogation and forensic analysis may reveal additional irregularities and help establish the full flow of funds in the alleged banking scam.
