Enforcement Directorate teams executed simultaneous searches at eight locations linked to key Congress figures, including Ballari Member of Parliament E Tukaram and four Members of the Legislative Assembly, under the Prevention of Money Laundering Act. The action is part of an expansive investigation into alleged misappropriation and laundering of welfare funds from the Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation.
Officials in charge of executing the operation stated properties belonging to Ballari City MLA Nara Bharath Reddy, Kampli MLA J N Ganesh, Kudligi MLA N T Srinivas and Ballari Rural MLA B Nagendra were searched across Ballari and Bengaluru. The raid specifically formed part of a money-laundering case connected to the alleged diversion of over ₹187 crore, with a significant chunk—around ₹20 crore—reportedly channelled into the 2024 Lok Sabha election campaign in Ballari.
Karnataka’s Chief Minister Siddaramaiah affirmed that the state administration would not impede lawful ED operations, stating, “Let them do whatever they want in accordance with the law.” His remarks came amid speculation that the BN Reddy-led government is cooperating fully with federal investigators.
The Valmiki scam first emerged in May 2024 following the suicide of a KMVSTDC accounts superintendent, who left a note alleging unauthorised transfers of funds exceeding ₹187 crore. Subsequent investigations uncovered that approximately ₹94 crore were diverted into shell and bogus accounts, principally in Telangana and Andhra Pradesh, purportedly overseen by individuals linked to inter-state fraud operations. The Special Investigation Team and Central Bureau of Investigation are examining the roles of senior officials, including former Corporation MD Padmanabha G J and accountant Parashuram Dugganavar, who have reportedly recovered much of the misappropriated money in the form of assets such as luxury cars and jewellery.
Former Scheduled Tribes Minister B Nagendra—also among those raided—resigned in June 2024 after allegations implicated him in the scandal. He was arrested later by the ED in July 2024 under the PMLA, though later granted bail due to lack of concrete evidence on his personal benefit from the funds. Investigators say his aides admitted to diverting hundreds of crores and dispensing large sums in cash to influence voters and party workers during the Ballari Lok Sabha polls, reportedly ₹200 per voter and ₹10,000 per booth worker.
Political undercurrents in response to the ED investigations have been strong. Congress President Mallikarjun Kharge accused central agencies of seeking to “divide the party” in Karnataka, hinting at motives linked to BJP electoral advantage. He questioned why such probes had been delayed and alleged selective targeting of Congress legislators to destabilise the state government.
Despite defections and allegations, the Karnataka government maintains that the investigation is legitimate. The ED has yet to disclose the estimated value of seized assets or documents retrieved from the properties, though their actions follow FIRs lodged both by the Karnataka police and the CBI around 2024, referencing the suspected laundering of welfare funds.
E Tukaram, who transitioned from MLA to MP in 2024 and holds a Master of Commerce and a finance diploma, has yet to make a public statement regarding the raids. Investigators emphasise that his inclusion in the ED raids is linked to the alleged flow of KMVSTDC funds into campaign expenditure, though no formal charges have been filed against him as of mid-June.
Background context indicates that the funds were transferred from a new account opened at MG Road branch of Union Bank of India between February and May 2023, without authorisation from KMVSTDC leadership. The SIT investigation identified at least 18 primary accounts and over 170 secondary accounts used in the alleged laundering network. Recovery efforts by SIT and ED have reportedly reclaimed “almost the entire amount,” as investigators continue their audit and seek to categorise assets for potential attachment.
Officials highlight that the current raids are strategic, aimed at securing documentary proof and digital trails. With assets and bank records still under scrutiny, the ED may pursue further legal measures, including provisional property attachment under the PMLA, akin to actions in other high-value financial crime cases such as the “Double Money Scam” in Madhya Pradesh.
Court proceedings and formal charges are expected to unfold over the coming months. Analysts anticipate that the validation of financial links between diverted funds and political expenditure will hinge on forensic examination of bank statements from 2023–24, ED and SIT surveillance records, and testimonies from insiders and aid-workers.
Judiciary Must Guard Rights Without Overstepping: CJI 