No evidence in ED case to show ex-Karnataka minister B Nagendra received Rs 94 crore siphoned from ST corporation, says court

The peculiar tribunal besides indicated that Nagendra had not been named arsenic an accused successful the predicate offence of fraud and embezzlement which was investigated and charge-sheeted by a Karnataka Police Special Investigation Team (SIT).

Nagendra was granted bail adjacent arsenic the ED filed a prosecution ailment successful transportation with the scam wherever it stated that Rs 20.10 crore of diverted funds from the corporation was utilized for the 2024 Lok Sabha elections and Nagendra’s idiosyncratic expenditure.

The ED, which functions nether the BJP authorities astatine the Centre, and the investigating agencies nether the Congress authorities successful Karnataka person been locked successful a warfare of attrition implicit the ST improvement corp scam with the cardinal bureau arresting Nagendra contempt the SIT not naming him arsenic an accused. A request for a Central Bureau of Investigation probe is besides presently pending successful the Karnataka High Court for orders.

“No uncertainty the instrumentality is good settled that successful bid to pull the rigours of the provisions of the Money Laundering Act, the idiosyncratic accused request not beryllium arrayed arsenic accused successful the predicate offence. At the aforesaid time, the prosecution is required to bespeak that the idiosyncratic arrayed arsenic accused successful the wealth laundering lawsuit had straight oregon indirectly received the proceeds of crime,” the peculiar tribunal successful Bengaluru has observed successful its October 14 bail order.

“In the said complaint expanse filed by the investigating agency, the recoveries which are made during the people of probe are mentioned which are extracted successful a signifier of illustration by the petitioner (Nagendra). Not overmuch quality is attributed to the said illustration and adjacent different connected appreciating the aforesaid materials it would intelligibly bespeak that nary betterment was made astatine the behest of the petitioner herein and it is besides applicable to enactment that arsenic per the complaint expanse filed successful the scheduled offence, a full sum of astir Rs 81 crores are being recovered from different accused persons,” the peculiar tribunal noted successful its bail order.

The information that nary recoveries of diverted funds were made connected the accusation provided by Nagendra assumes significance, the peculiar tribunal has indicated.

The allegations “in the last study filed by the responsive (ED) requires to beryllium considered with the last study filed successful the predicate offence. Interestingly, the petitioner herein is not arraigned arsenic accused idiosyncratic successful the predicate offence. Even if it is accepted that it is not required nether the proviso of instrumentality to arraign him arsenic an accused person, past the prosecution has to explicate that helium was the recipient of the proceeds of crime,” the peculiar tribunal said.

While the ED has named Nagendra arsenic the “kingpin and mastermind who was instrumental for committee of the full offence”, the probe has not yet established “the basal constituent of recipient of proceeds of crime”, the peculiar tribunal has ruled.

“At this juncture successful the predicate offence, the contiguous petitioner is not shown arsenic accused idiosyncratic oregon successful the ECIR [Enforcement Case Information Report] study it is shown that helium had received the proceeds of transgression but successful information it is stated that helium is the kingpin and idiosyncratic liable for siphon disconnected the funds of the Corporation, which is required to beryllium established during the people of trial,” the tribunal said.

“Unfortunately for the responsive authority, though they assertion to person unearthed monolithic documents, determination are nary iota of materials disposable successful the predicate offence to bespeak that the proceeds of transgression was being passed on,” the peculiar tribunal observed successful its bail order.

The peculiar tribunal has besides observed that “there is simply a superior tussle betwixt the probe being carried retired successful the predicate offence and successful the wealth laundering case, wherein some are investigated by antithetic agencies”.

The ED has relied connected statements provided successful custody by Vijay Kumar Gowda, Nagendra’s idiosyncratic assistant, to implicate the erstwhile curate successful the wealth laundering case. “The probe papers bespeak that the proceeds of transgression were utilized by him (Nagendra) for idiosyncratic and electoral expenditures including currency absorption during predetermination and his idiosyncratic adjunct i.e., accused No.8 Vijay Kumar Gowda were progressive successful handling funds,” the peculiar tribunal has noted.

The ED has alleged that Rs 20.19 crore of the diverted funds was utilized to enactment a campaigner contesting the 2024 Lok Sabha elections from the Bellary constituency and for Nagendra’s idiosyncratic expenses. “Evidence of these expenditures was discovered during hunt and seizure operations and corroborated by fiscal investigation and statements. Details of these predetermination expenses were retrieved from the mobile telephone of Vijay Kumar Gowda, who handled the currency connected Nagendra’s instructions,” the ED has stated.

Nagendra, who resigned aft the scam came to airy successful May 2024, is besides accused of obstructing the probe by destroying mobile phones and instructing others to stay silent. The ED arrested Nagendra and 5 different cardinal accused during the investigation.

“The BJP astatine the Centre is trying to destabilise the Congress government successful Karnataka. Even though I played nary relation successful the Valmiki scam, I person been harassed by the ED. After my arrest, the ED attempted to unit maine to sanction authorities leaders including CM Siddaramaiah and lawman CM D K Shivakumar. This was a scam involving the bank,” Nagendra said aft his release.

ED and SIT astatine loggerheads

Parallel investigations person been underway by the authorities SIT and the ED into the Rs 94.73 crore fraud that occurred astatine the ST improvement corporation. The authorities authorities has accused the ED of launching a witch hunt to people CM Siddaramaiah, who is besides the authorities concern curate and has adjacent filed a lawsuit of alleged coercion to implicate the CM against elder ED officials successful Bengaluru.

While the ED arrested Nagendra and claimed that portion of the Rs 94.73 crore of funds stolen from the corp was diverted for canvass funding, the SIT has not reported the uncovering of a nonstop relation of the erstwhile curate successful the fraud.

The stand-off betwixt the 2 agencies saw the Karnataka HC intervening successful August for the ED to get custody of Satyanarayana Verma, 36, a cardinal operative successful the alleged fraud. The ED was forced to attack the precocious tribunal aft the SIT took custody of Verma for 10 days connected August 3 successful transportation with a lawsuit of forging documents of the labour section to make 18 fake slope accounts successful the sanction of assorted companies to transportation the stolen funds.

On July 17, the ED issued a connection connected Nagendra’s apprehension stating that it had “uncovered that a important magnitude of funds were utilized to procure a important quantity of liquor conscionable anterior to the wide elections”.

On July 18, a squad of Congress ministers successful Karnataka held a property league and alleged that a conspiracy was afoot done the ED, astatine the lawsuit of the BJP astatine the Centre, to framework Siddaramaiah successful the case.

“In the probe into the Maharshi Valmiki Scheduled Tribes Development Corporation fraud, we person factual accusation and grounds that during the probe, the persons who are nether probe are being forced to springiness statements against radical successful apical positions successful the authorities government,” authorities Revenue Minister Krishna Byregowda said astatine the July 18 briefing.

What is the ST improvement corp scam?

The Rs 94.73 crore Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation scam surfaced connected May 26 this twelvemonth aft an accounts serviceman successful the corp died by termination aft a information of the Rs 187 crore deposited from the authorities treasury and different slope accounts into the corporation’s caller relationship successful the MG Road subdivision of the Union Bank of India disappeared.

The emergence of the scam forced Nagendra to resign.

The Karnataka SIT probe has recovered that the funds from the ST corp were allegedly siphoned to 18 superior accounts successful Telangana and Andhra Pradesh created by Verma, an accused successful a akin scam successful Chhattisgarh successful 2022, and his associates. The funds were allegedly subsequently routed to implicit 170 secondary accounts from wherever they were withdrawn.

The scam rocked the authorities legislature successful July aft Opposition parties sought Siddaramaiah’s resignation, saying helium should instrumentality “moral responsibility” for the fraud.

Over 20 radical person been linked to the fraud truthful acold and 14 radical person been arrested by the SIT. The accused see six Union Bank of India officials, 2 officials of the tribal corp (MD Padmanabha G J and accounts serviceman Parashuram Dugganavar) and 8 others, including adjacent associates of Nagendra.

The SIT was inactive probing the roles of Nagendra and Congress MLA Basanagouda Daddal, the president of the corporation, erstwhile the ED began its money-laundering probe against the duo and carried retired searches for 2 days connected their premises. Nagendra was subsequently arrested connected July 12.

The SIT has obtained statements from the arrested accused to bespeak that Nagendra perchance played a relation successful the fraud but has recovered nary nonstop grounds of his role, according to applications filed successful tribunal by the SIT portion seeking custody of the arrested accused.

A CBI lawsuit has besides been registered successful the case. The CBI is investigating the relation of the Union Bank of India officials successful the diversion of funds.