Karnataka Minister Nagendra, under A Cloud in Illegal Money Transfer Case, Resigns – News18

A Karnataka minister from the Siddaramaiah-led cabinet, B Nagendra, resigned on Thursday after being linked to a multi-crore misappropriation scam that came to light following the suicide of a government official, P Chandrashekharan, last month. The deceased left behind a six-page note indirectly implicating the minister in the diversion of unaccounted funds.

In a one-line resignation letter addressed to the chief minister, Nagendra said: “I am voluntarily resigning from my ministership.”

The chief minister is expected to forward the letter advising the Karnataka governor to accept Nagendra’s resignation.

It is learnt that chief minister Siddaramaiah and his deputy DK Shivakumar held a four-hour meeting with the minister. Since the case was being investigated by the CBI, they decided Nagendra should step down and await the probe’s completion.

“From day one he has said that he is innocent. Let him get a clean chit, and he can be back in the ministry. Right now, it is in the best interest of the party for him to face the investigation,” said a senior Congress leader who sought anonymity.

The ruling Congress in Karnataka was under pressure from the opposition BJP, which had been seeking Nagendra’s resignation since the incident came to light on May 28. It also petitioned governor Thawar Chand Gehlot, demanding the minister’s resignation. A delegation led by BJP state president BY Vijayendra and leader of opposition in the assembly R Ashoka called it “a big corruption scam in the state, where the money kept for the development of the ST community has been illegally transferred to more than eighteen fake bank accounts in Hyderabad”.

“None of these monetary transactions can happen without the approval of the finance department, and the minister is involved,” Vijayendra said.

The allegation made by Chandrashekharan that the funds were allegedly embezzled from the Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation to another bank account in the Union Bank of India, MG Road office, on the “oral instructions of the minister and senior bank officials” led to this resignation.

The Mumbai-headquartered Union Bank of India later filed a formal complaint with the CBI in connection with the embezzlement of money. Six senior officials of the bank were also suspended, along with the Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation (KMVSTDCL) managing director JG Padmanabha and accounts officer Parashuram G. Nagendra was the Scheduled Tribes welfare minister overseeing the corporation.

Karnataka home minister Dr G Parameshwara had earlier said that the CBI had taken up the probe based on the bank’s complaint, and the special investigation team set up by the Congress government, and headed by additional director general of police (economic offences), at the Criminal Investigation Department (CID), Manish Kharbikar, is also conducting its probe in parallel.

Countering the BJP, deputy CM Shivakumar said that he, along with the CM and Nagendra, had a detailed discussion, and the minister assured that he was not involved.

“In the interest of the party and the government…he doesn’t want to embarrass the party; he himself has offered to resign from the ministership,” said Shivakumar.

It all began when Rs 86.62 crore was allegedly siphoned out from the Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation to another bank account. Chandrashekharan had previously worked for Bhadravati-based Mysore Paper Mills (MPM) before joining the board as a superintendent at the KMVSTDCL in Bengaluru.

Nagendra headed the tribal welfare ministry to which the corporation is linked.

The note found next to the deceased held seniors in the corporation and a chief manager of the bank responsible for his death. In the note, Chandrashekharan said under the instructions of an officer, he was directed to open a “sweep-in and sweep-out account” that allows customers to transfer funds between savings and current accounts and link fixed-deposit accounts at the Union Bank, MG Road branch.

It is said that the corporation had a total grant of Rs 187.3 crore in its various accounts, and Rs 86.62 crore was allegedly siphoned out and transferred to other accounts, including those of prominent IT companies and a Hyderabad-based cooperative bank.

On May 28, two days after Chandrashekharan took his life, the chief manager of the Valmiki corporation, A. Rajashekhar, filed a complaint to High Grounds police. In his complaint, he stated that Rs 94 crore of government funds had been illegally moved out of the official account of the corporation, leading to financial losses.

“Rs 187.3 crore was transferred to the account in the MG Road branch between March and May this year by different banks and the state treasury. By then, the code of conduct (for Lok Sabha polls) came into force, and there was no communication between officials of the corporation and the bank… Meanwhile, we discovered Rs 94.7 crore was transferred from the MG Road branch to different accounts. We, the corporation officials, never received any information on the said transfer. When inspected, we discovered that the signatures of corporation officials were forged before carrying out the transactions,” the complaint said.

Rajashekhar added that when their “staffer Chandrashekaran died by suicide”, they wrote to the CEO of the bank on May 23 about the fraud.

“Immediately, Rs 5 crore was deposited in our account. From then, the bank stopped cooperating with us,” the complaint said.

The complaint letter identified the MD and CEO of Union Bank of India, A Manimekhalai, as the chief suspect and also named executive directors Nitesh Ranjan, Ramasubramanyam, Sanjay Rudra, and Pankaj Dwivedi, and the bank’s MG Road branch chief manager, Shuchishita Raul, as accused.

A government order was also issued on the matter, stating that “anonymous persons withdrew money from the bank account from March 5, 2024, to May 23, 2024, but the officer did not take note of it and thereby he was indirectly responsible for the transfer of funds to unknown accounts. Though the officer came to know about the transfer of Rs 86.62 crore to 14 anonymous accounts by forging the documents, on May 22, he did not bring it to the Government’s notice till the report was sought on May 27.”

Given the gravity of the issue, the Karnataka government set up an SIT on May 31.

Five arrests have been made so far by the SIT based on its investigations, including Sathyanarayana, the chairman of a Hyderabad-based cooperative society, JG Padmanabha, managing director of Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation Ltd, Parashuram Durugannanavar, accounts officer of the corporation, and Ballari-based Nekkunti Nagaraj and his father-in-law Nageshwar Rao. Nagaraj and Nageshwar are known to be close to minister Nagendra.