New Delhi/Bengaluru, 15 Oct

Over seven lakh people in the Ballari Lok Sabha seat were given Rs 200 each to vote in favour of the Congress candidate during the general elections this year and this money came from the cash siphoned in the alleged Valmiki scam by former Karnataka tribal minister B Nagendra along with his aides, the ED has claimed in its charge sheet.

It also charged that the legislator utilised these government funds to "cover" his personal expenses, like booking flights for himself and his associates, payment of electricity bills, vehicle maintenance and paying the monthly salaries of household staff. Nagendra, 53, was granted bail by a special court for people's representatives in Bengaluru on Monday.

The federal agency had filed its first charge sheet in this case last month before a special Prevention of Money Laundering Act (PMLA) court in Bengaluru listing Nagendra as the accused no. 1, apart from 24 others which included his aides, linked persons and some companies.

The money laundering case stems from an FIR of the Karnataka Police and the CBI where it was alleged that funds worth crores of rupees were diverted from the accounts of the Karnataka Maharshi Valmiki ST Development Corporation (KMVSTDC) and sent to "fake accounts" and later laundered through shell entities.

The corporation was established in 2006 with a primary focus on the socio-economic development of the Scheduled Tribe (ST) communities in Karnataka by running welfare schemes for them.

The alleged irregularities came to the fore after the accounts superintendent of the Valmiki Corporation, Chandrasekharan P, was found dead on 21 May. He wrote a suicide note alleging illegal transfer of money from the Corporation to various bank accounts. Nagendra and five others allegedly linked to him were arrested by the ED in this case.

The former minister told the ED that JG Padmanabha, the managing director of the Valmiki Corporation under his ministry, "fraudulently" transferred funds of the corporation without his knowledge or approval from the board. He denied any wrongdoing saying he did not benefit personally from the siphoned funds.

In his statements, Padmanabha told the ED that he was acting on the orders of the higher officials, including Nagendra, and he had no real control over the fraudulent activities. Nagendra, an MLA from Bellary rural seat, had resigned as minister in the face of these allegations.

Talking about the role of Nagedra's personal assistants -- B Vijay Kumar Gowda and Nekkenti Nagaraj-- and his associate Rudrayya, the ED claimed that they "admitted" to handling large sums of money, which aligns with the broader scheme of siphoning funds for electoral purposes.

Nagendra, the agency said, handled a "substantial portion" of the proceeds of crime, primarily in the form of cash, which was used to support activities related to the Lok Sabha Elections 2024. "This cash, siphoned from Valmiki Corporation, was received and distributed by Vijay Kumar Gowda, personal assistant to B Nagendra, under his direct instructions," it said.

Gowda, the ED said, recorded in his statement with the agency that he had handed over cash to the persons instructed by Nagendra which "eventually went to party workers and voters, following instructions from B Nagendra, for the purpose of election-related activities."

The agency said Gowda gave the agency a statement describing how cash was distributed in the Bellary LS seat during the 2024 Lok Sabha elections. "To incentivise voters to cast their vote in favour of Sh. E Tukaram, the INC (Congress) candidate, Rs 200 was distributed to each voter.

"Additionally, Rs 10,000 was allocated to each polling booth to compensate the Congress Party workers responsible for assisting voters and overseeing the booths," the ED said in the charge sheet.

It further alleged that Nagendra, in coordination with Bellary LS seat MLAs like Nara Bharath Reddy (Bellary city), MLA Ganesh (Kampli) and Kudligi MLA Dr NT Srinivas distributed cash funds as per the assigned polling stations among them.  As per the ED, these MLAs "ensured" that the cash was disbursed to voters and party workers in their respective constituencies and this was " corroborated" by the evidence gathered during the investigation.

The agency drew up a tabular column in the prosecution complaint (chargesheet) to show that 7,40,112 voters in Ballari were given Rs 200 each from the Valmiki funds totalling more than Rs 14 crore apart from Rs 10,000 each to party workers in each booth totalling over Rs 72 lakh.

It claimed that when Nagendra was confronted with this evidence, including pictures of cash wads found on the mobile of his PA Gowda, the former minister "remained evasive and refused to provide a clear response".

The agency said its probe found that both the Tribal Welfare and Finance Departments of the Karnataka government disbursed funds in violation of established guidelines, releasing them despite minimal utilisation of previously disbursed funds.

The probe, the ED said, uncovered a "complex" money laundering operation within the Valmiki Corporation with more than Rs 187.33 crore intended for welfare schemes being fraudulently siphoned off from the corporation's account between March-May, 2024.

The ED also claimed that Nagendra's movements during the period of the "scam" and the disposal of his three iPhones suggest "an intent to destroy the evidence". The agency charged that Nagendra, in his capacity as the minister of the Tribal Welfare Department, was "actively involved" in pooling, routing, and siphoning of KMVSTDC funds.

"B Nagendra's role in the conspiracy, his attempts to destroy evidence and the failure of departments under his ministry point to deliberate misconduct. "His claims of ignorance and non-involvement are contradicted by evidence, including forensic data, statements, and financial records," the ED alleged. It said unexplained transactions, managed by his PAs, suggest a "deliberate effort to conceal financial misconduct, aligning with broader fraudulent activities under investigation".