Karnataka tribal corporation scam: Rs 89 crore diverted to 600 bank accounts, CBI names ex-minister B Nagendra

The development came a day before D K Shivakumar’s swearing-in as Karnataka’s new chief minister on Wednesday. Nagendra is known to be a Shivakumar loyalist. This is the third chargesheet that the CBI has filed in the case. In all three, Nagendra has been named as a key accused.

The misappropriation came to light in June 2024 after P Chandrashekaran, a corporation official involved in auditing and coordinating with Union Bank of India, allegedly died by suicide, detailing the fraud and the people involved in a six-page note he left behind.

The CBI began investigating the case based on a Union Bank of India complaint, which said that Rs 84.63 crore of the corporation was allegedly misappropriated through illegal transfers/withdrawal between February 21 and May 6, 2024. The money was allegedly used for the Lok Sabha elections.

According to the CBI, the ST Welfare Department and the Karnataka German Technical Training Institute were also allegedly involved in the scam.

“The CBI investigation has established the role of 30 persons, including the former Minister B Nagendra, his close associate Nekkanti Nagaraj, officials of KMVSTDCL, state government officials, bank officials of UBI (MG Road Branch) and IOB (Kukatpally, Hyderabad), and various private individuals and middlemen,” the chargesheet said.

Bogus bank accounts, fake business entities

According to the CBI, Rs 89.63 crore of KMVSTDC funds was fraudulently diverted through forged cheques and RTGS transactions, via approximately 600 bank accounts, and converted into cash, bullion, and luxury vehicles to benefit the accused.

The officials of the Union Bank of India’s M G Road branch actively facilitated these transactions in violation of banking norms, the CBI said.

Businessman Satyanarayana Varma allegedly conspired with Etakari Satyanarayan, chairman of First Finance Credit Cooperative Society Ltd (FFCCSL), Hyderabad, in opening 18 bogus bank accounts in the names of fictitious business entities using forged registration certificates and fabricated KYC documents.

The MD and accounts officer of KMVSTDCL shared specimen signatures and sensitive banking information with Varma through Nekkanti Nagaraj and other accused, the CBI said. Forged rubber seals or stamps of the KMVSTDCL MD and accounts officer were fabricated through a graphic designer in Hyderabad and used to execute fraudulent banking transaction, it added. Approximately Rs 187 crore was allegedly pooled into KMVSTDCL’s Union Bank of India account by the MD and accounts officer.

Crores changed hands

The CBI said in its chargesheet that in 2023-24, tenders worth Rs 13.95 crore for Smart Computer Labs and Roti Making Machines were awarded by the ST Welfare Department to M/s SKR Infrastructure, Bengaluru, a firm owned by K. Srinivas Reddy, who is allegedly connected to Nekkanti Nagaraj. The CBI said its investigation established that Nagendra received illegal gratification of Rs 1.20 crore through Nagaraj, routed into the accounts of the minister’s sister, brother-in-law, personal assistant, and a farmhouse owner in Bellary. Nagaraj himself received Rs 5.72 crore from SKR Infrastructure and its sister concerns, the CBI alleged.

“Investigation also revealed that skill development training work worth Rs 4.90 crores was awarded by the SC/ST Nomadic Tribes Development Corporation to KGTTI, Bengaluru, at the instance of the minister, and sub-contracted without any tender process to M/s Sadguru Education Trust and M/s Sadguru Solutions, which was further sub-contracted to M/s Skillpoint Training and Services, Guntur. For this, Rs 64 lakh was paid as illegal gratification to Nagaraj’s family, and Rs 15.50 lakh was paid to Prakash N, Section Officer, ST Welfare Secretariat, as bribe,” the chargesheet stated.

Meanwhile, the Enforcement Directorate is probing the money-laundering aspect of the scam.