Karnataka Minister Nagendra Faces Charges In Funds Diversion Case

Former Karnataka minister B Nagendra faces serious charges as the CBI files a chargesheet against him for allegedly diverting Rs 89 crore in state funds intended for Scheduled Tribes, highlighting a major corruption scandal.

The CBI on Tuesday filed three chargesheets against then-Karnataka minister B Nagendra and his close associate Nekkanti Nagaraj in connection with the alleged diversion of Rs 89 crore in state government funds earmarked for Scheduled Tribes for personal gains, officials said.

Details of the Alleged Misappropriation

The CBI submitted the chargesheets before a competent court in Bengaluru after completing its investigation into the alleged misappropriation of funds of the Karnataka Maharishi Valmiki Scheduled Tribes Development Corporation Limited (KMVSTDCL), ST Welfare Department, and the Karnataka German Technical Training Institute (KGTTI).

The investigators contend that money intended for some of Karnataka's most economically vulnerable communities was siphoned away through a scheme that undermined the purpose of public welfare spending.

Founded in 2006, the Valmiki Corporation was established to implement development schemes aimed at improving the socio-economic conditions of the Scheduled Tribes in the state.

"Nagendra figures as an accused in all three chargesheets, reflecting the pervasive and central role he played across each strand of this criminal conspiracy," a CBI spokesperson said in a statement.

It is alleged that Rs 187 crore was pooled into KMVSTDCL's Union Bank of India (UBI) account by its managing director (MD) and accounts officer.

How the Funds Were Allegedly Diverted

"A sum of Rs 89.63 crore was fraudulently diverted through forged cheques and RTGS transactions, and the diverted funds were further layered through approximately 600 bank accounts and ultimately converted into cash, bullion, and luxury vehicles for the benefit of the accused," the agency alleged.

The diversion was allegedly facilitated by UBI officials posted in its MG Road Branch in Bengaluru in violation of banking norms.

The central probe agency claimed to have nailed the role of the then-ST welfare minister Nagendra in the "meticulously planned conspiracy" orchestrated in collusion with his close associate Nekkanti Nagaraj and Padmnabha J G, then-MD, KMVSTDCL.

The CBI registered the case based on a written complaint lodged by the UBI, naming three officials in its MG Road branch, and unknown others.

Further Allegations and Investigation Details

The agency also alleged 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 SKR Infrastructure, Bengaluru, a firm belonging to K Srinivas Reddy, who was closely connected to Nagaraj.

"The investigation has 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," the CBI spokesperson said.

The statement alleged that Nagaraj himself received Rs 5.72 crore from SKR Infrastructure and its sister concerns.

Nagendra is also the alleged beneficiary of a benami vehicle purchased using the diverted funds of KMVSTDCL, and the fraud amount was received by Nagaraj and his relatives, it said.

The alleged role of two other state government entities, the ST Welfare Department and the Karnataka German Technical Training Institute (KGTTI), also surfaced during the CBI probe.

The agency intimated the High Court of Karnataka about their alleged role, resulting in a court order on July 1 last year expanding the CBI's investigation to cover fraud in these organisations as well.

Key Players and Modus Operandi

The agency alleged that Satyanarayana Varma, who hailed from Hyderabad, played a crucial role in executing the fraud.

"Varma had previously executed a similar fraud in Chhattisgarh. He conspired with Etakari Satyanarayan, Chairman, 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 CBI spokesperson said.

The MD and account officer of KMVSTDCL shared specimen signatures and sensitive banking information with Varma through Nagaraj and the other accused, the spokesperson said.

"Forged rubber seals and stamps of the MD and account officer were fabricated through a graphic designer in Hyderabad and used to execute fraudulent banking transactions," the spokesperson said.

Skill Development Training Scam

Going further with the investigation, the CBI claimed to have shown that skill development training work worth Rs 4.90 crore was awarded by the SC and ST Nomadic Tribes Development Corporation to KGTTI, Bengaluru, at the instance of Nagendra, and sub-contracted without any tender process to Sadguru Education Trust and Sadguru Solutions, which was further sub-contracted to Skillpoint Training & Services, Guntur.

"The investigation has established that Rs 64 lakh was paid as illegal gratification to Nagaraj's family, and Rs 15.50 lakh was paid to Prakash N, a section officer in the ST Welfare Secretariat, as bribe. Adequate evidence was gathered to corroborate the conspiracy," the CBI spokesperson said.

According to the CBI, its probe established the alleged role of 30 persons, including Nagendra, Nagaraj, KMVSTDCL officials, state government officials, officials at UBI's MG Road Branch and the IOB, Kukatpally, Hyderabad, and various private individuals and middlemen.