Karnataka JD (S) leader among 8 held in currency racket
13 December 2016
The Central Bureau of Investigations (CBI) today busted a huge racket, involving bank officials, including a senior official of the Reserve Bank of India's Bengaluru office, and influential middlemen operating a exchange racket of Rs500 and Rs1,000 denominations.
The CBI arrested K C Veerendra, a JD (S) leader from Challakere, near Chitradurga, in Karnataka and seven others, for allegedly operating a havala racket involving exchange of old demonetised notes for new ones.
The eight middlemen men were arrested in a series of raids in which crores of rupees in new notes have been found, reports said.
Veerendra was arrested in connection with the seizure of Rs5.70 crore in new Rs2,000 notes found from his premises. Tax officials seized Rs5.7 crore in Rs2,000 notes, besides Rs90 lakh in Rs100 and Rs20 denominations in Hubballi district and in Challakere.
CBI also registered cases against officials of four banks - State Bank of India, State Bank of Mysore, ICICI Bank and Kotak Mahindra Bank, for conniving with the havala operators.
The agency also arrested K Michael, a senior official of the Reserve Bank of India (RBI) in Bengaluru, for allegedly helping to convert banned notes. He was allegedly involved in helping convert black money, involving over Rs1.50 crore in one case.
Investigators pretended to be customers to catch the eight middlemen allegedly involved in laundering black or untaxed money for a 15-35 per cent commission. Around Rs93 lakh in new notes was found on them in raids over the weekend.
Veerendra was produced before the special court in Bengaluru, which sent him to six days in CBI custody.
The sources said during a preliminary probe names of several persons have been taken by Veerendra and it is trying to gather material evidence linking the alleged hawala operator with them.
The sources said during the six days of questioning CBI will confront him with documents recovered from his premises and will try to get the source of these funds which may unravel alleged involvement of senior bank officials in the case.
On Saturday, officials from the Income Tax (I-T) Department conducted raids on 15 premises, including Veerendra's house in Challakere and a casino owned by him in Goa.
Reports from Hubballi say that I-T officials interrogated?Veerendra, Samundar Singh of Sagar Finance Company and owners of three casinos in Goa.
On Sunday night, Veerendra was asked about the source of money. Singh and the casino owners were interrogated on Monday.
Veerendra, a former chairman of Primary Land Development Bank, ran a chit fund business and also used to lend money before diversifying into a casino and other ventures. His name had figured in cricket betting too.
The arrests and discovery of new currency hoards across the country come in the backdrop of endless queues at banks and ATMs with inadequate supply of Rs500 and Rs2,000 notes available for disbursal among bank customers.