ED seizes assets, freezes Rs 18 crore in Rs 899 crore bank loan diversion case
Deepak Cables (India) Limited (DCIL) allegedly cheated a consortium of banks led by SBI of Rs 899.35 crore by obtaining large credit facilities and diverting the loan funds.
The ED probe allegedly found that the accused in the Deepak Cables (India) Limited bank fraud case allegedly used multiple entities for fictitious sales and purchases, circular trading, and issuance of fake corporate guarantees. (File Photo) The Enforcement Directorate’s (ED) zonal office in Bengaluru has seized Rs 1.27 crore worth of valuables and frozen bank accounts totalling Rs 18 crore in connection with a probe into the alleged diversion of a Rs 899.35 crore loan from a consortium of banks by Deepak Cables (India) Limited (DCIL).
The ED said on Monday that the development followed searches conducted between May 21 and 29 in a cheating case.
“During the search operations, various incriminating documents belonging to DCIL, K Venkateswara Rao, director of DCIL, Mahesh Agarwal (Kolkata), director of Adhunik Corporation Ltd. and others were seized under the provisions of the PMLA [Prevention of Money Laundering Act], 2002,” the central agency said in a statement.
The ED said it initiated an investigation on the basis of a First Information Report (FIR) registered by the Central Bureau of Investigation (CBI) against DCIL and its director, K Venkateswara Rao and others, for allegedly cheating a consortium of banks led by the State Bank of India (SBI) 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, the ED added.
During the probe, it was revealed that the accused allegedly used multiple entities for fictitious sales and purchases, circular trading, and issuance of fake corporate guarantees. These transactions were utilised 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, the ED said.
A huge amount of loan funds was also allegedly diverted to the related entities under the control of Rao without “any business rationale and doubtful purpose”, the central agency added.
Case lodged in 2021 after SBI flags irregularities
DCIL is a Bengaluru-based manufacturer of power transmission and distribution cables and an EPC (engineering, procurement, and construction) contractor for power lines and substations.
In March 2021, the CBI’s Banking Securities and Fraud branch registered a case after the SBI’s Stressed Assets Management Branch flagged irregularities. In the complaint, the SBI alleged that the crime took place between 2005 and 2020.
According to the SBI, a forensic audit conducted in 2020 revealed that the accused firm colluded and committed illegal activities—including forgery by manipulation and submission of fake financial statement, fabrication of fictitious transactions, diversion of funds and misappropriation of funds—for purposes other than those for which the funds were released. It was also found that the properties that were shown as collateral security were allegedly later sold without informing the bank.
The case was later referred to the ED for further investigation.
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