Shivakumar Money laundering probe: Co-op bank chief may appear before ED today

In 2017, soon after demonetisation, the Income-Tax Department had red-flagged loans worth over Rs 500 crore given from co-operative banks to sugar firms run by Congress leaders Lakshmi Hebbalkar and Ramesh Jharkholi as possible money laundering transactions.

Both were at the time associates of Shivakumar but Jharkiholi subsequently fell out with Shivakumar over control of the Belagavi district in Karnataka and is now associated with the BJP after being disqualified as a Congress MLA in July.

Hebbalkar, who is currently a Congress MLA, was recently questioned by the ED over her financial dealings with Shivakumar and the ED summons to Rajanna is seen as a follow-up in the probe of Shivakumar and associates.

Rajanna has acknowledged receiving the ED summons and stated that he will appear before the agency on October 9. “The ED may want to know how the loans were availed,” he said.

Filings with the Registrar of Companies show that Soubhagya Laxmi Sugars Ltd, a sugar mill started in 2008 by Jharkhiholi, got loans to the tune of Rs 318 crore from the Karnataka State Apex Co-operative Bank-led consortium after the Congress government came to power in 2013, when Jharkiholi was briefly the minister for small scale industries.

Filings for Harsha Sugars Ltd, started in 2014 by Hebbalkar, shows that the sugar mill received a Rs 215 crore loan in 2015 from almost the same group of banks.

The I-T Department in an official statement issued in January 2017 said that investigations had so far “confirmed that huge unexplained cash deposits have been made in the bank accounts of family members and associates and in benami names in primary cooperative societies which were transferred to business entities carrying out sugar manufacturing”.