Karnataka govt moves to secure Rs 1,000 crore in other bodies amid Valmiki corpn scam

Chief Minister Siddaramaiah-headed Finance Department has decided to “enforce” an existing mandate requiring state-run development corporations to keep their money in bank accounts run by the treasury.

According to top sources, various state-run corporations have parked Rs 1,000 crore in different bank accounts across the state. Karnataka has more than 24 caste- or community-based development corporations, many of them created for political purposes.

Last year, the Finance Department had asked all corporations to put their money in personal deposit (PD) accounts under the treasury. However, the mandate was not enforced as some corporations said the interest they earn from money in other bank accounts helped pay salaries.

After the scam at the Karnataka Maharshi Valmiki ST Development Corporation broke out, the Finance Department is moving quickly to secure taxpayers’ money available with other state-run bodies.

“We will enforce the mandate,” Additional Chief Secretary (Finance) L K Atheeq told DH. “Only revenue-earning bodies such as the Karnataka Rural Infrastructure Development Ltd (KRIDL) need to operate their own bank accounts. In such bodies, we’ll introduce a Public Financial Management System (PFMS),” he said.

The Valmiki Corporation was required, as per a government order dated February 28, 2023, to move its money into a PD account of the treasury. This was not enforced.

Of the Rs 89 crore that has been embezzled at the Valmiki Corporation, the government has managed to recover only Rs 7.7 crore, sources said.