The Enforcement Directorate is probing a Rs 7.10 crore cash trail between an alleged middleman in the Karnataka Public Service Commission recruitment scam and a banker associate, after telling a special court that the money may represent proceeds of crime.
The agency said KPSC scam middleman Basavaraj Kannale allegedly gave the cash to Onkar K, vice-president of Shri Om Lakshmi Souharda Bank in Bhalki, Bidar, during 2025-26. “Rs 7.10 crore was given in cash to Onkar K by this accused. A statement has been given. This needs to be investigated to see if it is proceeds of crime,” ED counsel Maheshwari D M told the special court on Monday at the end of Kannale’s custody.
The disclosure forms part of an investigation into alleged money laundering linked to fraudulent KPSC recruitments. The ED arrested suspended KPSC chairman Shivashankarappa Sahukar and member B V Geetha on October 6 in connection with alleged irregularities in the recruitment of veterinary doctors. The agency is also examining whether the alleged recruitment fraud extended to 13 selection processes conducted since 2024, during the tenure of KPSC examination controller Gyanendra Kumar Gangwar, an IAS officer arrested in the case.
According to the ED and the Karnataka Police Criminal Investigation Department, bribes ranging from Rs 20 lakh to Rs 40 lakh were allegedly collected from at least 17 candidates among the 1,400 aspirants who appeared for the examination for 400 veterinary doctor posts. The alleged payments were linked to access to examination questions, answer keys and assurances of selection.
The agency said nine candidates transferred Rs 1.35 crore to Kannale as an advance for examination questions. The amount allegedly comprised Rs 65 lakh in cash and Rs 70 lakh transferred through bank accounts. Investigators are seeking to reconcile these funds and establish the identities of the candidates involved. The transactions were allegedly routed through accounts at the Bhalki cooperative bank, where Onkar was a vice-president.
The ED has also alleged that Kannale handed Rs 80 lakh in cash to Gangwar between January and March 2026 and used Rs 52 lakh from the Bhalki bank accounts to finance jewellery purchases by Gangwar’s fiancée. Kannale allegedly transferred a further Rs 30 lakh to Gangwar’s family in 2025. These allegations have not been established by a court.
The special court said funds were allegedly routed through third-party accounts belonging to Umesh B R, described as Kannale’s accountant, Onkar K, another associate named Rajashekhar and a firm called Bhagavathi Enterprises. The agency said the arrangement was intended to break the link between the alleged proceeds of crime and their ultimate beneficiaries.
The court remanded Kannale to judicial custody until October 23. The Karnataka High Court separately granted him five days of interim bail from October 15 to 20 to visit his wife and newborn child under police escort.
The alleged examination irregularities also include the release of answer keys to six candidates on the eve of the veterinary recruitment examination, following alleged advance payments of between Rs 10 lakh and Rs 20 lakh. Investigators said the top 14 rank holders in the parent category and three top rankers in a backlog category allegedly paid bribes for examination material or answer keys.
The ED is further examining an alleged practice in which broad selection lists were published without candidates’ marks, a format the agency said could facilitate demands for bribes after examinations. The investigation into the cash trail, candidate identities and the wider recruitment processes is continuing.
