Bengaluru: In a major crackdown on alleged financial irregularities in Karnataka’s cooperative sector, the Enforcement Directorate has provisionally attached 11 immovable properties worth ₹16.95 crore in connection with a money laundering probe linked to Srivaibhava Sourhardha Pattina Sahakari Niyamitha.
The action has been taken against the cooperative society’s president Nagavalli B S, her husband and chief executive officer Rajesh V R, and associated entities. According to the agency, the attached assets include land parcels, residential plots and buildings located in Ramanagara, Mysuru and Bengaluru, allegedly acquired using proceeds of crime.
ED officials said the provisional attachment order was issued on February 12 and executed by the Bengaluru Zonal Office.
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Alleged Conflict of Interest and Lending Norm Violations
Investigators allege that the cooperative society systematically violated lending norms by sanctioning loans to companies and entities directly linked to its own president and CEO. In several instances, large sums were disbursed without adequate collateral, exposing depositors’ funds to significant risk.
The probe was initiated following an FIR registered at the Subramanyapura Police Station. The complaint was filed by the managing director of the Karnataka State Federal Co-operative Limited, accusing the society’s management of financial misconduct, conflict of interest and diversion of funds. Based on this FIR, the ED began examining the money laundering angle.
Money Trail Points to Private Ventures and Property Acquisitions
According to the enforcement agency, preliminary findings indicate that funds mobilised through the cooperative were routed into private business ventures controlled by the accused, and subsequently used to build or purchase immovable properties. These assets have now been provisionally seized under provisions of the Prevention of Money Laundering Act (PMLA).
Sources familiar with the investigation said analysis of bank transactions, documentary evidence and money trails has also revealed weaknesses in internal control mechanisms during loan approvals. Several transactions allegedly bear direct involvement of senior office-bearers of the society, pointing to deliberate bypassing of regulatory safeguards.
The ED is currently mapping beneficiary accounts, third-party transfers and the broader financial network linked to the accused. Officials indicated that further attachments cannot be ruled out as the probe progresses and additional assets are traced.
Wider Governance Questions for Cooperative Institutions
“The focus is now on tracking end-use of funds and identifying all channels through which suspected illicit money was moved,” a source said, adding that investigators are also scrutinising linked entities and shell structures.
As part of the legal process, the attached properties will be placed before a special PMLA court, which will decide whether to confirm the provisional seizure. Legal experts note that the case carries wider implications for governance standards in cooperative institutions, especially at a time when depositor protection remains a growing concern.
Sector observers say the action sends a strong signal on accountability within cooperative bodies, which often handle large volumes of public savings but operate with limited oversight.
Investigating agencies maintain that the crackdown underscores their resolve to enforce financial discipline and transparency, stressing that no individual will be spared on the basis of position or influence when public money is at stake.
