New Delhi: Former Karnataka minister for tribal welfare B. Nagendra spent nearly Rs 15 crore during the 2024 Lok Sabha elections out of the Rs 89 crore siphoned off from the account of the state-run Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation (KMVSTDC), the Enforcement Directorate (ED) has alleged in its prosecution complaint filed last month before a special PMLA court in Bengaluru. The court took cognisance of the complaint this week.
As part of the plan, voters were paid Rs 200 each while Rs 10,000 was allotted to each polling booth in constituencies such as Bellary, the ED further alleged.
In its first prosecution complaint, some portions of which ThePrint has seen, the probe agency has elaborated on Nagendra’s alleged central role in the diversion of funds from the corporation aimed at improving the socio-economic status of Scheduled Tribes (ST) in Karnataka.
“The investigation revealed that on Sh. Nagendra’s directive, Rs 187 crore from KMVSTDCL account were consolidated into a single account at Union Bank’s MG Road branch. Subsequently, Rs 89.6 crore were siphoned off using forged documents and fake accounts. A significant portion of these funds was used for election expenditures and personal expenses,” the agency said.
“Mobile phone records of Sh. Nagendra indicated the disposal of three handsets during the scam, suggesting an attempt to destroy evidence. Search and seizure operations under the PMLA (Prevention of Money Laundering Act) between July and August 2024 further revealed the fraudulent nature of the entire operation,” it added.
According to the ED, it was Nagendra who pressured KMVSTDC’s managing director to initially open a new account of the corporation at Union Bank of India’s MG Road Branch and later pressured him to transfer the existing account from the Vasanth Nagar branch to the MG Road branch, in which Rs 187 crore of the corporation’s funds were deposited in multiple tranches, allegedly for the smooth execution of large transactions.
The alleged scam came to light when an accounts superintendent working with the corporation’s Bengaluru office died by suicide in May, leaving behind a note alleging misappropriation of funds by top officials of the KMVSTDC, including then minister Nagendra, who allegedly gave him an “oral order” for the transfer of funds amounting to Rs 187 crore to the new bank account.
Following the revelations, the corporation lodged a police complaint against top officials of the Union Bank of India, based on which the Karnataka Police filed a case under Indian Penal Code (IPC) sections 409 (criminal breach of trust by public servants, bankers, etc), 420 (cheating), 467 (forgery), 468 (forgery for the purpose of cheating) and 471 (fraudulently using a forged document as genuine).
Around the same time, Union Bank of India suspended its then branch head, deputy branch head and credit officer at the MG Road branch and lodged a complaint with the Central Bureau of Investigation. The agency registered a case under similar charges, adding IPC sections 120-B (criminal conspiracy) and 13 (2) of the Prevention of Corruption Act, dealing with criminal misconduct by a public servant.
As the purported note by the corporation’s deceased superintendent led to a political controversy, the Siddaramaiah government in Karnataka constituted a special investigation team on 31 May to probe the alleged irregularities.
The SIT in August filed a preliminary chargesheet naming 12 people, including the corporation’s former MD, J.G. Padmanabha, and former accounts officer P. Durgannavar.
Sathyanarayana Etakari, chairman of the First Finance Credit Co-Operative Society, who allegedly played a key role in the opening of several accounts, via forged documents, for the siphoning of the corporation’s funds, and an aide of Nagendra, Nekkunte Nagaraj, were arrested as part of the probe by the SIT. However, its chargesheet did not mention any role of the former minister in the alleged diversion of funds.
“ED investigation revealed that under the influence of B. Nagendra, the account of the corporation was moved to the MG Road Branch without any proper authorisation, where Rs 187 Crore, including Rs. 43.33 Crore from the State Treasury under the Ganga Kalyana Scheme, were deposited without following proper procedures and in violation of government guidelines. These funds were subsequently siphoned off through multiple shell accounts and converted into cash and bullion,” the agency said in a statement Wednesday.
“ED investigation also revealed that an amount of Rs. 20.19 crore of the diverted funds were used to support a candidate contesting the 2024 Lok Sabha election from the Bellary constituency, as well as for the personal expenses of B. Nagendra. Evidence of these expenditures was discovered during search and seizure operations and corroborated by financial analysis and statements. Details of these election expenses were retrieved from the mobile phone of Vijay Kumar Gowda, who handled the cash on Nagendra’s instructions,” the agency further added.
‘Loads of gold, a Lamborghini’
The ED registered an Enforcement Case Information Report (ECIR), equivalent to a police FIR, in the case on 6 June, the day Nagendra resigned from the Karnataka cabinet. A month later, it arrested him as part of the probe.
The agency has alleged that Nagaraj facilitated a meeting between Nagendra and Padmanabha in May last year, which was followed by another meeting later in November-December, when the former minister pressured Padmanabha to open a new account of the corporation at Union Bank of India’s MG Road branch.
Funds of the corporation began to be transferred to the transferred account, the agency has alleged, after pressure from Nagendra, and Rs 187 crore was moved in tranches between 4 March and 21 May this year.
The ED has alleged that while the corporation did not utilise the already available funds in its earlier account at the Vasanth Nagar branch, its finance department transferred Rs 43 crore in the last few days of the financial year directly to the transferred account used for siphoning of funds.
The agency has alleged that as soon as the corporation’s funds were transferred to the MG Road branch, two aides of Nagendra—Nagaraj and Nageshwar Rao—roped in Hyderabad-based business operative Satyanaryana Varma, who brought on board Etakari.
The agency has presented a series of transactions carried out from the corporation’s bank account and alleged that Varma took Etakari’s help to open another 18 accounts based on forged documents.
The agency in its prosecution complaint has documented that the diversion of funds began with the transfer of Rs 9.5 crore to three to five accounts, followed by transfer of a larger tranche of Rs 40.54 crore to nine more accounts on 11 March.
These fund transfers took place on the basis of an officially signed letter by Padmanabha and Durgannavar, and Varma got the remaining tranche amounting to Rs 33 to Rs 35 crore over the next 20-30 days.
The ED has further alleged that one Kaki Srinivas, who made fake signature stamps and letterheads for the opening of accounts, received Rs 2.07 crore, out of which he used Rs 2 crore to purchase gold and handed it over to Varma. Out of the gold purchased by Srinivas for Varma, the latter alleged returned 1 kg to him in exchange for help to his family and legal assistance in case of his arrest.
The agency has also alleged that Varma bought a Lamborghini car for Rs 3.3 crore and transferred approximately Rs 9 crore to others, such as Rao, Padmanabha, and one Chandra Mohan who was the point of contact between Union Bank of India and Varma for the transfer of the corporation’s account to a different branch for a commission of Rs 50 lakh.
Overall, the federal probe agency has alleged that transfers amounting to Rs 45.02 crore have been traced backwards to several accounts owned by fake entities, while transfers of Rs 44.60 crore have been identified to several shell companies.
(Edited by Nida Fatima Siddiqui)