Bengaluru: The CBI on Tuesday arrested RBI official, K. Michael and JD(S) leader K.C. Veerendra, who owns a casino in Goa for allegedly converting a whopping Rs 1.51 crores into new notes illegally, with the probe likely to yield information that could incriminate senior bank officials across the banking fraternity and their political mentors.
Michael, a senior special assistant, Issue Department, RBI, Bengaluru, was arrested for allegedly helping a friend convert the obsolete higher denomination notes to the tune of Rs 6 lakh into Rs 100 notes without proper documentation.
The CBI on December 6 had registered a case related to money laundering at a State Bank of Mysore branch in Kollegala, some 145 km from Bengaluru. A senior cashier at the branch, Parashivamurthy, was named as the accused for converting Rs 1.51 crore into new currency notes without proper documentation for alleged financial benefits.
The CBI probe found that the Kollegala branch of SBM is a currency chest, from where currency notes are distributed to the neighbouring branches of the bank. As Michael was from the RBI Issue Department, he had gone to the branch to refill currency on November 8 and was at the branch when the demonetisation plan was announced. He immediately helped one of his friends to exchange old notes for Rs 100 notes at the bank without any documentation through Parashivamurthy.
Veerendra, meanwhile was arrested by the CBI in a separate case relating to a seizure of Rs 5.70 crore in new currency notes from his bathroom by the Income Tax department recently.
"We arrested Veerendra from Hubballi on December 10 and brought him to Bengaluru the following day. He was produced before the CBI court, which granted us his custody for six days," a top CBI official said.
The bank officials in a conspiracy with Veerendra exchanged Rs 5.76 crore of demonetised notes with the new currency of Rs 2,000 and Rs 100 denominations during November and December, the FIR stated.
Apart from Veerendra, middlemen Thippeswamy and Venkatesh, residents of Chitradurga district of Karnataka, and officials from four banks - State Bank of India, State Bank of Mysore, ICICI Bank and Kotak Mahindra - have been named in the FIR in the case.
The CBI received information that bank officials in and around Challakere had entered into a conspiracy with Veerendra, Thippeswamy and Venkatesh and other middlemen to "dishonestly and fraudulently" facilitate the exchange of Rs 5.76 crore of old currency notes.
The FIR stated that the bank officials falsified the accounts of their banks on the basis of forged and fabricated documents of identity and address proofs in the names of several individuals to misrepresent that the new currency notes were exchanged with the general public through bank counters and ATMs.
"Veerendra used the services of Thippeswamy and Venkatesh to manage the exchange of Rs 5.76 crore which he had stacked at this residence illegally. 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 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, and the rest in Rs 100 and Rs. 20 denominations in Hubballi district and in Challakere.
Veerendra's name had figured in a cricket betting case earlier, sources said, adding that he was running a chit fund business and later forayed into casino and other ventures. Veerendra, a businessman from Challakere, Chitradurga district, is a former chairman of Primary Land Development Bank.
Sources said during a preliminary probe, Veerendra named several of his cohorts. The CBI is trying to gather material evidence to link them to an alleged hawala operation run by Veerendra.
The CBI will confront him with documents recovered from his premises and will try to get to the source of these funds which may reveal the alleged involvement of senior bank officials and politicians, they said.
