Demonetisation : Bankers in the dock

CBI has arrested an RBI official and a JDS leader K C Veerendra, who is also a casino owner, in connection with separate cases relating to alleged illegal conversion of currency post-demonetisation.

Reserve Bank of India official K Michael, posted here, was arrested by CBI while he was allegedly trying to convert Rs 1.51 crore of old currency notes. CBI sources said Michael, a senior special assistant at RBI, was arrested last week.The agency has also arrested Veerendra in a separate case relating to seizure of Rs 5.70 crore of new currency from the bathroom of the casino owner by the Income Tax department.

We have arrested K C Veerendra. He was arrested in Hubballi on December 10 and brought to Bengaluru the following day and produced before the CBI court. He is in our custody for six days, a top CBI official told PTI today.

Besides Veerendra, midddlemen Thipeswamy and Venkatesh, residents of Chitradurga districts of Karnataka, and unknown officials of four banks -- State Bank of India, State Bank of Mysore, ICICI Bank and Kotak Mahindra have also been named in the FIR in this case. The bank officials in a criminal conspiracy with Veerendra exchanged Rs 5.76 crore of demonetised notes with the new currency of Rs 2000 and Rs 500 denomination during November and Decemeber 2016, the CBI FIR alleged.

The FIR alleged that the agency received a source information that officials of SBI, SBM, ICICI, Kotak Mahindra and other banks in and around Challekere in Chitradurga district had entered into criminal conspiracy with Veerendra, Thipeswamy and Venkatesh and other middlemen to "dishonestly and fraudulently" facilitate exchange of Rs 5.76 crore of old currency notes which ceased to be legal tender on November 8.

It was alleged that the bank officials falsified the accounts of their bank on the basis of forged and fabricated documents of identity and address proof in the names of several individuals to misrepresent that the new currency notes have been exchanged with the general public through the bank counters and and ATMs of the banks.

During the Income Tax Department searches, the currency was seized from hidden vaults in a bathroom in Veerendra's house, the agency said.

On December 10, IT officials had raided 15 premises, including Veerendra's house in Challakere and a casino owned by him in Goa. The officials seized Rs 5.7 crore in Rs 2,000 currency notes, besides Rs 90 lakh in Rs 100 and Rs 20 denominations in Hubballi district and in Challakere.

CBI sources said Veerendra allegedly connived with some bankers and middlemen to exchange demonetised currency with Rs 2,000 notes. Earlier, Veerendra's name had figured in a cricket betting case, the sources said. He was running a chit fund business and later forayed into casino and other ventures, they said. Veerendra, also a businessman from Challakere in Chitradurga district, is a former chairman of Primary Land Development Bank.

Also read : Lok Sabha passes bill to tax black money post-demonetisation 

The sources said during preliminary probe names of several persons have been taken by Veerendra and CBI is trying to gather material evidence linking the alleged hawala operator with them. They said during the 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.