Valmiki Corporation scam: 8 Hyderabad accounts got Rs 45 crore on overdraft, says report

Bengaluru: Embezzlement of taxpayers’ money at the ST Development Corporation was a “systematic” fraud, which included raising a Rs 45-crore loan against a fixed deposit to pay eight Hyderabad-based bank accounts, the Finance Department has said in an internal report.

The Finance Department, headed by Chief Minister Siddaramaiah, has found some gaping holes in the way the Karnataka Maharshi Valmiki ST Development Corporation managed its books, according to its report that DH has seen.

The government has constituted a special investigation team (SIT) into the unauthorised movement of Rs 89 crore of the corporation’s money.

“A huge amount of government money has been misused through a systematic conspiracy,” the report concluded.

According to the report, now-suspended corporation MD J G Padmanabh and accounts officer Parashuram G Durgannanavar signed a resolution and opened a fixed deposit of Rs 50 crore on March 30 at the MG Road branch of the Union Bank of India.

On the same day, they applied for a loan of Rs 45 crore against the term deposit. The overdraft of Rs 44.60 crore was sent to eight different bank accounts in a Hyderabad branch of the RBL Bank, again on the same day. 

The money went to the following accounts: System and service company (Rs 4.55 crore), Ram Enterprises (Rs 5.07 crore), Skillmap Training (Rs 4.84 crore), Swap Design (Rs 5.15 crore), G N Industries (Rs 4.42 crore), Novel Security (Rs 4.56 crore), Sujal Enterprises (Rs 5.63 crore), Grab a Grub (Rs 5.88 crore) and V6 Business (Rs 4.50 crore).

The Finance Department raised a crucial point. “There is no clarity in the corporation’s Memorandum and Articles of Association on powers of the managing director to borrow loans. The bank provided the overdraft facility without verifying this,” it stated.

Corporation officers could not justify to the Finance Department the decision to open an account in the “faraway” MG Road branch in February this year despite having one close to office in Vasanthnagar.

The MG Road branch account got Rs 144 crore from two of the corporation’s Bank of Baroda accounts and Rs 44.33 crore from the Huzur Treasury, totaling Rs 187.33 crore. “There is no information on which programme or what years Rs 144 crore transferred from Bank of Baroda belongs to,” the report said, adding that the passbook of the MG Road branch account was not checked and transactions not recorded in any cash register.