The Karnataka government on Wednesday, 19 August made a formal statement on the floor of both the Legislative Assembly and the Legislative Council in Bengaluru, presenting a detailed account of the Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation fund irregularities and urging the Opposition to withdraw its agitation and engage in parliamentary debate. The move comes amid sustained disruptions by the Opposition, which has been demanding the resignation of Planning and Statistics Minister B. Nagendra over his alleged role in the scandal.

Government's Account of the Fund Transfer

Deputy Chief Minister G. Parameshwara, who presented the statement in both Houses, said the Opposition was disrupting legislative proceedings by making allegations against Nagendra and insisted the matter be addressed through constitutional and parliamentary procedures. The government argued that disrupting the legislature — funded by taxpayers — for political ends was a disservice to citizens and the Constitution.

According to the government's statement, on 19 February 2024, the Corporation's Managing Director opened an account at the Union Bank of India's M.G. Road branch in Bengaluru and transferred funds into it. By 4 March 2024, a total of ₹187.33 crore had been moved to this account — comprising ₹143.99 crore from 20 bank accounts maintained by the Corporation and ₹43.33 crore from the State Huzur Account. The government maintained that the Corporation's Managing Director held the authority to initiate such transfers and that neither ministerial nor government approval was required.

How the Fraud Unfolded

Of the ₹187.33 crore transferred, ₹89.63 crore was subsequently routed to 18 unidentified bank accounts using allegedly forged documents. A partial recovery of ₹5 crore was made on 23 May 2024, when funds were returned to the Corporation's Union Bank account from RBL Bank in Hyderabad.

The case drew public attention after Corporation accounts superintendent P. Chandrashekhar died by suicide at his residence in Shivamogga on 25 May 2024, leaving behind a six-page death note alleging illegal transfer of Corporation funds. A case of abetment of suicide was registered at Vinobanagar police station, Shivamogga, on 26 May, based on a complaint by his wife, Kavitha. On 28 May, the Corporation's General Manager filed a separate complaint at High Grounds police station, Bengaluru, regarding the alleged illegal fund transfers.

Investigation and Recoveries

The state government constituted a Special Investigation Team (SIT) under the Criminal Investigation Department (CID) on 31 May 2024. The Central Bureau of Investigation (CBI) registered an FIR on 3 June 2024 based on a complaint by Union Bank of India officials, while the Enforcement Directorate (ED) registered an ECIR on 6 June 2024 under the Prevention of Money Laundering Act (PMLA).

The state SIT went on to identify and arrest 14 accused persons. Seizures during the investigation included ₹16.83 crore in cash and 16.2546 kg of gold biscuits and jewellery, along with vehicles including a Lamborghini, Mercedes-Benz, Creta, and Innova Hycross — though the government noted that original vehicle owners subsequently approached the court and secured their vehicles after making payments. In total, ₹79.68 crore has been recovered or is in the process of being recovered; the SIT is continuing its probe into the remaining ₹4.94 crore.

Nagendra's Legal Position

The government's statement drew a careful distinction between the SIT's findings and those of the central agencies. Nagendra voluntarily resigned as Minister for Tribal Welfare, Youth Empowerment and Sports on 6 June 2024. The ED searched his premises on 10 July 2024, questioned him the following day, and took him into custody on 12 July 2024 under a notice issued under Section 50 of the PMLA.

Notably, the SIT's preliminary chargesheet filed on 5 August 2024 did not name Nagendra as an accused. Its supplementary chargesheet filed on 10 November 2025 also did not name him. However, the ED's chargesheet filed before the Special Court for MPs and MLAs on 9 September 2024 named Nagendra as Accused No. 1 among 25 accused. The Special Court granted him bail on 14 October 2024, and the same court granted him anticipatory bail in the CBI case on 14 January 2026. The government underlined that no court has convicted Nagendra in the case.

Opposition Protest and Political Standoff

The government identified A1 Satyanarayana Verma as the principal accused, alongside Srinivas Rao Kaki, Satyanarayana Itkari, former Corporation Managing Director J.G. Padmanabha, and accountant Parashuram Durgannavar, as allegedly playing key roles in the conspiracy. Verma, the government said, is a habitual offender who faced a similar case in Chhattisgarh prior to the Valmiki Corporation matter and has not been granted bail by any court.

The government also pushed back against Opposition criticism of the CBI and ED, citing observations made by the Supreme Court and various High Courts on the functioning of central investigative agencies. It concluded by calling the continued agitation an insult to the parliamentary system and urged members to return to legislative business in the interest of the people of Karnataka.