Former Karnataka Bank Chairman Nabbed in $7.5 Million Fraud Scandal

In a significant development, the Enforcement Directorate (ED) apprehended R M Manjunatha Gowda, the ex-chairman of Shimoga District Co-Operative Central Bank, on Wednesday, accusing him of orchestrating a Rs 63 crore ($7.5 million) financial scam at one of the bank’s branches in Karnataka. The arrest, executed under the Prevention of Money Laundering Act (PMLA), followed extensive raids conducted by the agency in Bengaluru and Shivamogga districts just a day prior.

According to an ED statement, Gowda was brought before a special court in Bengaluru, which remanded him to 14 days of agency custody. The federal probe agency alleges that the large-scale embezzlement at the bank’s City Branch was masterminded by branch manager B Shobha, acting under Gowda’s directives. Efforts to reach Gowda, Shobha, or their legal representatives for a response to the allegations were unsuccessful.

The ED’s investigation aligns with a chargesheet filed by the Lokayukta Police of Karnataka, which claims that Shobha, in collaboration with other accomplices, siphoned off Rs 62.77 crore. The scheme reportedly involved creating fictitious gold loan accounts without account holders’ consent, relying on forged documents to facilitate the fraud. The agency further asserts that the illicit funds, termed “proceeds of crime,” were funneled to Gowda after being laundered by Shobha and her co-conspirators.

Gowda is accused of using the misappropriated money to acquire various assets, including movable and immovable properties. The Lokayukta Police chargesheet notes that he possessed wealth far exceeding his legitimate income sources, a claim the ED is now probing under anti-money laundering laws. The case underscores ongoing efforts by Indian authorities to tackle financial misconduct in cooperative banking institutions.