india

Updated: Jan 19, 2018 15:53 IST

Businessmen and middlemen from Hyderabad, Kolkata, and Varanasi arrived in Kanpur a few days ago and checked into various hotels to close a deal to exchange old, so-called demonetised currency notes, for new. Late on Tuesday night, the Kanpur police swooped down on a Kanpur home where they found old currency notes, lots of them, in trunks, sacks, and cartons. The police were assisted by a team from the National Investigation Agency and the Reserve Bank of India. The police also arrested 16 people.

By Wednesday morning, the police had finished counting the money. There was Rs 100 crore of it in old Rs 500 and Rs 1000 notes, rendered invalid by Prime Minister Narendra Modi’s surprise demonetisation announced last November.

“Out of 16 people who have been arrested, seven are businessmen, four are money converters and five are field agents. All of them have charged under sections 420, 511, 120B and 5/7 of the Specified Bank Notes (cessation and liability act) Act, 2017,” IG, Kanpur zone, Alok Singh told reporters.

According to Singh, the mastermind is a local businessman Anand Khatri, who, along with his men, was collecting demonetised currency notes from various businessmen for exchange and was stashing it at his house in Swaroop Nagar.

Singh said the police had been on the trail of the operation for six months based on a tip-off. The National Investigation Agency got involved after the seizure of Rs 25 crore of old demonetised currency last month in Meerut and the arrest of a property dealer.

The trunk that contained the demonetised currency notes.

“The group had field agents who collected the money from major cities of Uttar Pradesh and handed it over to Khatri. The money was sent to Hyderabad (for exchange into new currency notes) from Kanpur, Varanasi and Kolkata. Their commission ranged from 15-40 per cent and it depended on the desperation of the businessman concerned,” said Singh.

The arrested moneychangers from Hyderabad and Kolkata have told the police that they have paid Rs 15 crore in new currency to Khatri and Yadav in the last six months after conversion.

“They haven’t revealed their modus operandi. We will be seeking their remand from the court for pointed questioning,” Singh said.

Anand Khatri’s lawyer Sharad Kumar Birla said it was too early for him to comment on the matter.

ADG, law and order, Anand Kumar said: “All the agencies which specialise in investigating such cases have been informed. We are waiting for their support to help us identify the backward and forward linkages.”

According to the police, Khatri hit upon the idea of helping people convert their old (and value-less) currency, which they had presumably not been able to exchange because it was not declared, and recruited a clerk at DAV College, Santosh Kumar, to help him.

The duo contacted brokers Koteshwar Rao, Ali Hussain, Rajeshwari Ranga Rao, Manish Agarwal and Sanjeev Agarwal from Kolkata and Hyderabad who agreed to get the money converted. They had agreed to pay Rs 25 on every Rs 100 converted and a 10% commission for Khatri.

“As the word spread , many people from Varanasi and Mirzapur collected money from businessmen and gave it to Khatri,” said a person familiar with the investigation who asked not to be named.

The police seized Rs 96 crore from Khatri’s house for which they had to arrange five trunks of 4x6 feet. The counting of currency notes lasted 12 hours and the police had to use 37 machines and 80 men for the task.

The tipping point in the investigation seems to have been the arrest of the Meerut property dealer. He led the team to the middlemen in Hyderabad.

The police believe that Non Resident Indians may have been used to facilitate the exchange. According to Singh, Rao, one of the arrested has named aa Hyderabad based company which has many employees, many of them NRIs, posted overseas. The exact modus operandi isn’t clear because the window allowed to NRIs to exchange old currency notes has long closed.

“We are verifying the veracity of their disclosure; it will take some time to come up with a clear picture about they were doing it,” Singh added.

The income tax department officials who raided the house found a diary with mysterious entries, sources privy to the investigation said.

The entries made in the diary are cryptic and are being deciphered to help the police move ahead with their investigation, they said.

“The IT sleuths confiscated the diary which has entries in alphabetical order. The contents of the diary were being studied. Prima facie it appears that the entries mention the money being paid to Khatri,” an official said.

“We will confront Khatri when he is remanded to police custody for further questioning,” he said.