A rising Scheduled Tribe (ST) leader and senior legislator in Karnataka, who was inducted as a minister for the first time in May 2023 when the Siddaramaiah-led Congress government was formed, resigned Thursday after being embroiled in a case of alleged misappropriation of Rs. 94.73 crore fund from the Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation.

Nagendra, who belongs to the sizeable Valmiki Nayak ST community, has claimed that he was not under pressure from any quarters to resign but was doing so to facilitate a fair probe into the case. He has also claimed he will return to the Congress Cabinet if the investigations being undertaken by the state Special Investigation Team (SIT) as well as the CBI proved that he is not involved in the alleged illegal diversion of funds from the corporation.

A four-time MLA from the Bellary region, Nagendra is no stranger to controversy. During 2008-13, when Nagendra was the BJP MLA from Kudligi, he was associated with the infamous Bellary illegal mining syndicate of former BJP minister G Janardhan Reddy. He then used to operate an iron trading firm, Eagle Traders and Logistics, which came under the scanner for the export of illegal iron ore during a probe by the Karnataka Lokayukta and the CBI.

In his election affidavit in 2023, Nagendra stated that there were as many as 26 cases related to illegal mining which have still been pending against him, including four CBI cases. He also declared Rs 17 crore wealth in his affidavit.

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At the peak of the iron ore mining scam in 2013, after his first stint as the BJP MLA, Nagendra had reported a 700% spike in his wealth from Rs 2 crore to Rs 14 crore in five years.

In the last 10 years since – as an Independent MLA from 2013 to 2018 and a first-time Congress legislator MLA from 2018 to 2013 – Nagendra’s wealth has grown by only 21%, as per his election affidavits.

He was hailed as a giant-killer in the 2023 polls after he trounced his former associate in the Reddy brothers’ syndicate, B Sreeramulu, the BJP heavyweight from the Valmiki Nayak community, in the Bellary Rural seat. This feat earned him a position in the Siddaramaiah ministry.

On May 27 last year, when he was sworn in as a minister, Nagendra took his oath in the name of the sage Valmiki Nayak, the author of the Ramayana, a revered figure for his community.

A popular and soft-spoken politician, Nagendra is widely seen as being groomed by the Congress as a prominent Valmiki Nayak leader in the state. “Nagendra is very approachable. During his first tenure as the Congress MLA of Bellary Rural (2018-2023) there was a lot of peace among communities. He would resolve disputes with his personal interventions. This was not the case when Sreeramulu was the MLA. There were frequent fights among communities,” a local resident had said ahead of the 2023 polls.

Nagendra’s appeal in the region is also widely believed to have delivered the Bellary parliamentary seat to the Congress in the current Lok Sabha polls.

Nagendra who broke away from the Janardhan Reddy syndicate and the BJP After the Rs 12,000 crore illegal mining scam roiled Karnataka is still known to have cordial relations with the Reddy brothers and Sreeramulu despite being political rivals.

He is also known to have close ties with CM Siddaramaiah and Deputy CM and state Congress chief DK Shivakumar. According to some Congress leaders from Bellary, it was Siddaramaiah’s decision in 2018 to induct Nagendra into the Congress.

“We do not care what Nagendra has done outside. He has developed Kudligi. He has contributed Rs 5,000 when there have been deaths in families. He has given drinking water, brought roads and created employment. Whenever he meets youths he gives each one a Rs 100 note,” said Lingaraj, a native of Ramdurga in Kudligi ahead of the 2018 polls.

The impoverished Bellary region has a large tribal population, especially involving the Valmiki Nayak community. The Bellary Lok Sabha seat is reserved for STs, who make up about 30% of its population as compared to 3% statewide.

The BJP has held sway over the Valmiki Nayak community in Bellary since 2004 when the party ended the Congress’s dominance in the region through the Reddy brothers and Sreeramulu. The Congress has been attempting to regain its lost ground there through leaders like Nagendra.

Shivakumar said earlier this week that Nagendra would step down to prevent embarrassment to the Congress amid the BJP’s demand for his resignation.

“We had a meeting with him (Nagendra) on Wednesday. During the discussion, Nagendra said he had not committed any violation and was ready to face any inquiry including a CBI probe. Media reports that the CM has asked him to resign are not true. He did not want to embarrass the party and hence said he would take a decision on the resignation,” he said.

Addressing a press conference before tendering his resignation, Nagendra appeared unperturbed about the investigations into the corporation fund misappropriation case. “For the last ten days, the media has been reporting about the case. Also, the Opposition (BJP) has been targeting the government. I have met CM Siddaramaiah and Deputy CM Shivakumar. I am resigning from the post on my own and no one has forced me to do so,” he said.

The Congress government has constituted an SIT under the CID director general of police to investigate the siphoning of Rs 94.73 crore of funds from a bank account of the corporation. The CBI has also filed an FIR in the case after the Union Bank of India (UBI) officials wrote to the agency for a probe.

The alleged scam came to light after the suicide of an official of the corporation P Chandrashekaran, who was involved in auditing, on May 26. In a six-page suicide note, he alleged fraud in the use of the corporation’s funds.

While an unnatural death case in this regard was registered in Shivamogga, the corporation’s managing director filed a complaint in Bengaluru, accusing six UBI officials of being involved in the scam.

The preliminary probe in the case has revealed that Rs 94.73 crore of government money was siphoned in just one day and transferred to nine fictitious accounts created on the same day. The money was transferred to the accounts in the Ratnakar Bank Limited (RBL) in Hyderabad.

According to the investigation, at the end of the financial year on March 31, 2024, Rs 50 crore was transferred to the account of the corporation by the state government. At the time Rs 187.33 crore was available in its UBI account.

A board meeting of the corporation was held on the same day, where it was decided that Rs 50 crore fixed deposit would be kept for 12 months. On the same day, a Rs 45 crore loan was availed with the security of Rs 50 crore.

The BJP demanded the resignation of Nagendra, who was also in charge of the youth affairs and sports ministry, alleging that he was part of a “conspiracy” behind the scam.

“Without minister Nagendra’s consent, three or four officials cannot transfer funds to Telangana,” state BJP president BY Vijayendra said, alleging that the corporation funds were funneled for the Lok Sabha elections. The BJP had threatened to launch a protest if Nagendra was not removed from the ministry.