The Babaleshwar Police have arrested eight employees in connection with an alleged multi-crore financial fraud at the Nandi Co-operative Sugar Factory in Krishna Nagar, Karnataka. Investigators allege that the accused manipulated automated weighing systems and generated fraudulent sugarcane procurement records over multiple crushing seasons, resulting in wrongful payments exceeding ₹12.33 crore.
According to District Superintendent of Police Laxman Nimbargi, investigators have so far recovered or frozen approximately ₹11.32 crore during the ongoing investigation.
Alleged Weighment Manipulation Continued for Six Crushing Seasons
According to police, the alleged fraud operated from the 2020–21 crushing season through 2025–26.
Investigators allege that the conspiracy centred on Dhareppa Dundappa Navi, an employee working in the factory's sugarcane weighing section, who allegedly acted in collusion with weighbridge operators and field personnel.
Police claim the accused intercepted legitimate sugarcane consignments arriving at the factory and generated duplicate or fabricated weighment tokens and billing records linked to genuine deliveries. By allegedly inflating procurement figures by approximately 34,490 metric tonnes, investigators say the group diverted cooperative funds amounting to ₹12,33,22,793.
According to the investigation, the money was subsequently routed through 91 bank accounts allegedly opened in the names of associates and intermediaries.
Internal Audit Triggered Police Investigation
The alleged irregularities surfaced after the factory's Managing Director, Ashok Sangappa Tippareddy, identified discrepancies during an internal financial review and lodged a complaint with Babaleshwar Police.
A Special Investigation Team headed by Vijayapura Rural Circle Inspector Ramesh Avaji, under the supervision of Additional Superintendent of Police Ramnagouda A. Hatti and Deputy Superintendent of Police T.S. Sulpi, conducted forensic audits of weighbridge records, electronic transaction logs and procurement documentation.
Police allege that digital analysis linked the suspected fraudulent transactions to the accused employees.
Following coordinated searches and financial investigations, authorities reported:
- ₹21 lakh recovered in cash.
- ₹4.80 crore seized from bank accounts allegedly linked to the prime accused.
- ₹5.48 crore intercepted in additional financial accounts.
- ₹82.07 lakh frozen across multiple banking institutions.
The total amount secured during the investigation stands at approximately ₹11.32 crore, according to police.
Police Probe Wider Cooperative Fraud Network
Along with Dhareppa Dundappa Navi, police arrested:
- Bheerappa Basappa Gadadar
- Yallappa Basappa Gadadar
- Prakash Siddaling Gaddi
- Parmanand Pundalik Gaddi
- Mahadev Siddaling Kamble
- Balappa Pandu Chopade
- Prabhakar
Investigators are examining whether the accused were involved in similar alleged weighbridge manipulation schemes at cooperative sugar factories in Belagavi and Bagalkote, where related criminal cases are reportedly pending.
Authorities are also investigating whether any senior administrative officials or banking personnel knowingly assisted the alleged diversion of funds.
Cooperative Sector Asked to Strengthen Controls
Following the investigation, state cooperative authorities have reportedly advised sugar factories and agricultural cooperatives to strengthen internal controls by introducing:
- Biometric authentication at weighbridge operations.
- Independent third-party audits of seasonal procurement records.
- Automated reconciliation of weighment data.
- Direct integration of farmer bank accounts with official land and crop records.
- Enhanced digital monitoring of procurement transactions.
Officials believe these measures could reduce opportunities for procurement-related financial fraud and improve transparency across cooperative institutions.
Shunyatax Global Insight
The investigation highlights the financial risks associated with manual intervention in agricultural procurement systems. As cooperative institutions increasingly rely on digital weighbridge infrastructure and electronic payment systems, robust internal controls, independent audits and real-time transaction monitoring have become critical safeguards against procurement fraud. Transparent governance and technology-driven verification remain essential to protecting both cooperative finances and farmer interests.
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