The death of an accounts superintendent from the Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation (KMVSTDC) on May 26 has brought to light a major financial scandal involving fraudulent transactions worth crores. The incident sparked a political storm in the state, leading to a criminal investigation against several high-ranking officials, and the BJP-led Opposition has demanded the resignation of Scheduled Tribes Welfare Minister B Nagendra.
While the BJP demanded a CBI probe, Home Minister G Parameshwara said that the state’s Criminal Investigation Department (CID) is currently investigating the case and that it would not be transferred to the CBI. On May 31, the Karnataka government constituted a Special Investigation Team (SIT) under Additional Director General of Police (CID) Manish Kharbikar to probe the case.
On May 21, accounts superintendent Chandrashekaran P was found dead in his Shivamogga home, two days after returning from Bengaluru, where he worked. His family discovered his body when they returned from an afternoon outing. Next to his body was a handwritten six-page suicide note, revealing the intense pressure he allegedly faced from his superiors to facilitate unauthorised fund transfers of over Rs 80 crore.
In the note, Chandrashekaran blamed the Managing Director of KMVSTDCL JG Padmanabha, Accounts Officer of KMVSTDCL Parashurama G Durgannanavar, and Chief Manager at Union Bank of India, Bengaluru, Shuchismitha Ravul for his death.
Chandrashekharan also detailed specific unauthorised transactions, starting in March 2024. He was allegedly directed to write a letter seeking the transfer of funds from the department’s bank accounts at Union Bank of India’s Vasanth Nagar branch to the MG Road branch. The transactions included Rs 25 crore on March 4, Rs 25 crore on March 6, and Rs 44 crore on March 21. Additionally, significant amounts were transferred from the state treasury on May 21, including Rs 43.33 crore and Rs 50 crore. However, the letter does not mention who the receipients of the transfers were. Padmanabha used to exert pressure to transfer the money, he said in the note.
The note further described the pressure from the KMVSTDC’s senior management to carry out these transfers. On May 21, the Managing Director (MD) of the KMVSTDC instructed Chandrashekaran to write a cheque for Rs 50 crore and "confidentially" withdraw the amount from the MG Road bank account. When Chandrashekaran attempted to execute this transaction, he met resistance from the bank manager, who insisted on either the presence of authorised personnel or a written letter from the MD.
In the note, Chandrashekaran said that he spoke to the MD on the phone and told the bank manager that he would return the next day with the letter. But the next day, the bank record showed that the money was withdrawn after relevant documents were signed by the MD and the accounts officer.
On May 23, Chandrashekaran, along with the accounts officer and Padmanabha, met the regional head of Union Bank G Mahesh, and filed a complaint. “However the MD said that he spoke to Nagaraj, staff of the ST Welfare Minister’s office. All the money will come back. Until then, keep all this information confidential,” Chandrashekaran wrote. The note said that the MD claimed that Rs 5 crore was returned in the evening. “There was no record of that,” his note said.
The note alleged that around Rs 80 crore to Rs 85 crore of Scheduled Tribes Welfare grants had been illegally swindled with only Rs 5 crore reportedly returning to the account. However, there were no records of that Rs 5 crore, the note said.
On May 24, the issue was brought to the notice of the corporation president, who told Chandrashekharan that he would file a complaint after looking into it. On May 27 – a week after Chandrashekaran’s death – Vinobhanagar police registered an FIR against JG Padmanabha, Parashurama G Durgannanavar, and Shuchismitha Ravul based on a complaint by Kavitha, Chandrashekharan’s wife.
As Chandrashekaran’s death gained political attention, the corporation’s general manager R Rajshekar complained to the High Grounds Police on Wednesday, May 28, alleging fraudulent transactions by bank officials. A case was registered against eight officials from the Union Bank of India, including the MD and CEO A Manimekhalai under sections 409 (criminal breach of trust by public servants), 420 (cheating), 467, 468, and 471 for forgery, and section 149 for unlawful assembly with a common object.
As per the FIR, the KMVSTDC’s account was transferred to Union Bank of India’s MG Road branch from Vasanth Nagar on February 21. It stated that on February 26, bank personnel obtained signatures from the corporation’s MD and account officers to oversee the account.
Between March 4 and May 21, 2024, the FIR outlines that various amounts rounding off to a total of Rs 187.33 crore were deposited into the corporation's MG Road account from different bank accounts and the state treasury.
On May 22, 2024, officials from the corporation visited the bank to request chequebooks, passbooks, and relevant records related to the account. However, the corporation officials found that bank had forged signatures to illegally transfer Rs 94.73 crore to different bank accounts.
According to the complaint, bank officials resorted to forging signatures on crucial documents, including RTGS forms and board resolutions, to unlawfully transfer funds. The FIR further said that the irregularities were flagged the next day to chief manager of bank in MG road, who then transferred Rs 5 crore to the corporation.
Deccan Herald reported that one of the alleged beneficiaries of the money swindled from the corporation is Happiest Minds Technologies Ltd, a company whose chairman is tech billionaire Ashok Soota. However, the company issued a statement refuting the allegations, and said that the bank account which allegedly received the money did not belong to the company.
A day after Chandrashekaran's death, Shivamogga BJP MLA SN Channabasappa held a press conference where he displayed the death note and alleged that the government needed to investigate the case, as the officer was under pressure. Channabasappa claimed that Chandrashekaran mentioned in the death note that he was directed by a minister and an officer to open a "sweep-in and sweep-out account." This account allowed customers to transfer funds between savings and current accounts and link fixed deposit accounts at a bank branch on MG Road in Bengaluru.
Karnataka BJP chief BY Vijayendra accused Congress leaders of engaging in corruption while pretending to be advocates for Dalits and tribal communities. Vijayendra demanded the immediate dismissal of B Nagendra, who serves as the Minister of Youth Empowerment, Sports, and ST Welfare. The Minister, meanwhile, denied involvement in the illegal transfer of funds and suggested that bank officials may have orchestrated it.
On May 30, the BJP intensified its agitation and attempted to lay siege to Chief Minister Siddaramaiah's residence. The BJP compared this case to a 2022 incident where a contractor died by suicide after levelling corruption charges against Karnataka Minister KS Eshwarappa in a note. This led to Eshwarappa's resignation and highlighted the issue of 40% kickbacks demanded from contractors under the previous BJP government. This incident was also a major controversy in the lead-up to the Assembly elections.
Responding to these parallels, Parameshwara pointed out that, unlike the contractor, Chandrashekaran did not name any minister in his death note. “In the case against KS Eshwarappa, his name was directly mentioned. In this case, the minister’s (Nagendra’s) name is not directly mentioned. We have to wait till the probe is over,” he said.
On May 30, the Union Bank of India in a statement said that it had filed a complaint with the Central Bureau of Investigation (CBI).In a statement, the bank said, “The Bank is cognisant of the alleged fraudulent transactions in the accounts of the Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation Limited (a Government of Karnataka Undertaking) which happened at our MG Road Branch, Bengaluru. The Bank has promptly declared the transactions in question as fraudulent when the irregularities came to light. To ensure a thorough investigation and swift identification of the culprits, we have filed a formal complaint with the Central Bureau of Investigation (CBI).”
“Additionally, three branch officials have been suspended pending further inquiry,” it said.