Congress MLA B Nagendra granted bail in multi-crore Valmiki Corporation 'scam' case

The Enforcement Directorate said last week Nagendra has been identified as the primary accused and mastermind behind the scam, allegedly orchestrating it with the help of 24 others.

The special court for cases involving elected representatives in Bengaluru has relied upon the Apex Court judgements in various cases under money laundering while granting bail to former minister B Nagendra in the Valmiki Scheduled Tribes Development Corporation Limited case. The court noticed that though ED has named Nagendra as the mastermind of the scam, in the predicate offence, the state Special Investigation team (SIT) has not at all named him in its chargesheet.

“At this juncture in the predicate offence, the present petitioner is not shown as accused person and in the ECIR report it is shown that he had received the proceeds of crime but in fact it is stated that he is the kingpin and person responsible for siphon off the funds of the Corporation, which is required to be established during the course of trial,” special court judge Santhosh Gajanan Bhat said.

The judge also cited the Apex Court judgement in Vijay Madanalal Choudhary case wherein the top court held that the provision of section 45 of Prevention of Money Laundering (PML) Act does not impose absolute restraint on the grant of bail.

The first FIR in the Valmiki Corporation scam was registered on May 28, 2024 at the High Grounds police station in Bengaluru and subsequently the investigation was entrusted to the SIT of Criminal Investigation Department (CID). On June 6, 2024, the ED had registered the ECIR and arrested Nagendra on July 12, 2024.

Nagendra contended that no prima facie case has been made out and a false allegation has been levelled against him. Opposing the bail petition, the ED argued that as a Minister of Scheduled Tribes Affairs, Nagendra was overseeing the functioning of the Corporation and had orchestrated the entire scam exercising control and supervision on all the transactions. According to the ED chargesheet, of the funds misappropriated, one portion was utilised during the general elections in the month of May, 2024 in Ballari constituency.

On the scope of inquiry under section 45 of PML Act, the special court cited the Apex Court judgments on bail matters involving offences under the money laundering, including Manish Sisodia vs Directorate of Enforcement case. The court also noted that there is a serious tussle between the investigation being carried out in the predicate offence by the SIT and in the money laundering case by the ED.

The court observed that a person who is arrayed as accused in PMLA case need not be arrayed as an accused in predicate offence, and all that is required to be established by the prosecution is that he is the recipient of the proceeds of crime.

During the bail hearing, Nagendra had submitted before the court a chart with recoveries made by the SIT in the predicate offence. “Not much dispute is attributed to the said chart and even otherwise on appreciating the aforesaid materials it would clearly indicate that no recovery was made at the behest of the petitioner herein and it is also relevant to note that as per the charge sheet filed in the scheduled offence, a total sum of nearly Rs. 81 Crores are being recovered from other accused persons. The aforesaid aspect once again assumes importance since no recoveries are made at his behest,” the special court said.