Karnataka: Money laundering probe widens in multi-crore Valmiki corporation case

The money laundering probe into the alleged financial irregularities in Karnataka ‘Valmiki corporation’ is set to get wider, with investigators bringing under their scanner a number of government and private individuals who are suspected to have obtained slush funds worth crores of rupees, official sources said Thursday.

The Enforcement Directorate (ED) is also expected to share a report with the Election Commission (EC) about alleged electoral malpractices taking place, which it recently mentioned in a statement claiming that a “substantial” amount of funds “misappropriated” from the Corporation were used to purchase liquor during the Lok Sabha elections apart from some luxury vehicles.

The role of Additional Director of state Social Welfare Department B Kallesh, who claimed that the officials of the federal agency were pressuring him to name Chief Minister Siddaramaiah, arrested former minister and Congress MLA B Nagendra and the finance department, has also come under an “enhanced scrutiny” after it was gathered that he was recently suspended by the state government on charges of corruption in his department. Kallesh had identified the two ED officers as Deputy Director Manoj Mittal and Assistant Director Murali Kannan.

The state police registered an FIR against two ED officers posted in Bengaluru on the complaint of Kallesh, which, as per the sources, is understood to have been made “under pressure” from some high-ranking persons in order to get a relief in the suspension case probe being carried out against him. The alleged corruption charges against Kallesh are being looked into by the ED, and the CBI, which is also probing the case, the sources said. The ED, after filing of the police complaint, moved the Karnataka High Court seeking relief and quashing of the FIR against its officers saying this was a “counterblast” to exert “undue influence” in the probe being conducted in the misappropriation of funds from the Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation Limited. It had told the high court that the agency officers “followed the rule book” and questioned Kallesh after serving him summons as prescribed under the Prevention of Money Laundering Act (PMLA) and that there was no “intimidation” or “force” used against the Karnataka government officer. Kallesh, according to the sources, is under the scanner of the ED as it is understood that he was a “vital link” to the alleged irregularities that took place in the Valmiki Corporation with sources saying they have gathered certain “solid evidence” to nail his role in the case. Early this week, the high court stayed the police FIR saying there could be potential abuse of law against the officers performing their duties. Justice M Nagaprasanna said in his July 23 ruling that allowing such investigations (under the police FIR) could deter officers from performing their duties, likening the situation to “innovative filmy style ideas” and warning against opening a “Pandora’s box.”

The court adjourned further hearing in the case for August 21. The ED, the sources said, is in the process of recording statements of various government and private individuals linked to the case while some more may be summoned soon. It had claimed in a statement issued on July 17 that Nagendra’s associates were “implicated in fund diversion and cash management” and that “about Rs 90 crore were diverted to 18 fake accounts in Andhra Pradesh and Telangana (from the funds of the Valmiki corporation).” “The diverted funds were then layered through fake and shell accounts, with cash and bullion dispersed among the accused,” it had said. The agency had also said that it recovered some “incriminating” evidence related to the handling of the “illicit” funds while searches were conducted at the residence of Congress MLA Basanagouda Daddal. The alleged irregularities came to fore after accounts superintendent of the Corporation, Chandrasekharan P was found dead on May 21. He wrote a suicide note alleging illegal transfer of money from the Corporation to various bank accounts. Subsequently, two officials were suspended. With mounting pressure minister Nagendra resigned on May 29. The Congress government thereafter constituted a Special Investigation Team (SIT), which has arrested around 11 people till now. In the suicide note, Chandrasekharan alleged that there was an unauthorised transfer of Rs 187 crore belonging to the state-run Corporation from its bank account. Additionally, Rs 88.62 crore was illegally deposited into various accounts of some Information Technology (IT) companies and a Hyderabad-based cooperative bank.