On June 25, 2022, the Directorate of Enforcement detained Khagesh Kachhwal and Varanasi Dileef in connection with a money laundering investigation after they acted as entry operators, enabled extensive phoney LC discounting, and provided large accommodation entries to aid the Bank Fraud accused individuals’ money laundering efforts.
Based on an FIR filed by the CBI, EOB, Chennai against M/s RE Cables & Conductors Pvt Ltd (RECC) and others for alleged misappropriation of SBI funds and causing wrongful loss totalling Rs 74.83 Crore, ED launched a money laundering probe.
According to the ED’s investigation, Khagesh Kachhwal and Varanasi Dileef are two of the most important entry providers in Hyderabad, and it was with their help and direction that M/s RECC fraudulently misapplied for and used bank credit facilities. Several shell entities are under the ownership of Varanasi Dileef and Khagesh Kachhwal. The strategy is for M/s RECC to open several LCs under the names of Shell Entities controlled by Khagesh Kachhwal and Varanasi Dileef in the name of short-term advances while using phoney paperwork in the process.
Against such LCs, no products or materials are delivered. The LCs were then discounted with a reputable bank, and M/s RECC got the proceeds from the discounting to help it get through its cash flow crisis. Since RECC failed to pay the bank, the LCs descended and the bank suffered a loss.
Both defendants acknowledged that they are offering these services for a financial benefit of 0.25 percent of the transaction’s value. They have offered these services to other Hyderabadi business houses in addition to M/s RECC, including companies like M/s Golden Jubilee Hotels, M/s VNR Infra Pvt Ltd, M/s Transstroy India Ltd, etc. which are currently under investigation for significant loan fraud. Their fake entry business involves transactions totalling several hundred crores.
On June 25, 2022, Khagesh Kachhwal and Varanasi Dileef were detained and brought before the Hon. Special PMLA Court. The Hon. PMLA Court awarded the accused individuals 8 days of ED detention. There is still work being done on this case’s investigation.
