Karnataka police have formed special teams to track down tainted former BJP minister and mining baron Gali Janardhana Reddy who is alleged to have bribed an official to help a now-arrested city financier accused of duping investors of Rs 200 crore.

Police sources on Wednesday said a “lookout notice” might be issued so that Reddy — said to be in Hyderabad trying for anticipatory bail — does not flee the country.

The development comes a day after the BJP lost a Lok Sabha by-election in Bellary, where Reddy and his brothers held sway till recently. The defeat ended the party’s 14-year grip on the parliamentary constituency.

Reddy, 51, out on bail after spending more than three years in prison on charges of illegal mining and export of iron ore, is not a BJP member any more.

But he remains close to the party and had even campaigned in the Assembly elections earlier this year.

The police had stumbled upon Reddy’s links with an illegal finance company while interrogating Syed Ahmed Fareed, the proprietor of the city-based Ambidant Company that ran the fraudulent deposit scheme.

Sources said it was a photograph in Fareed’s mobile phone that showed him sitting with Reddy in a Bangalore hotel that put the crime branch after the mining baron, one of the three Bellary brothers.

The sources said the crime branch has formed three teams to nab Reddy.

According to the police, the photograph was taken at a luxury hotel in the city sometime in March 2018 when Reddy is alleged to have struck a deal to bail Fareed out.

Reddy, the sources said, allegedly paid Rs 1 crore as bribe to an Enforcement Directorate official.

Fareed’s company is accused of swindling investors of Rs 200 crore. The police started an investigation after some of the investors protested in the city last year demanding action against the businessman.

Early this year, the income tax department and the Enforcement Directorate raided Ambidant and unearthed documents that the sources said could nail Fareed who was arrested recently.

The sources said Fareed told the police he contacted Reddy to help him out of the mess and had agreed to meet him at the hotel where Reddy apparently struck a deal for about Rs 18 crore, possibly in gold bars, to avoid being tracked.

Bangalore police commissioner T. Suneel Kumar said Fareed had contacted Reddy to seek help. “A large number of people had rushed to invest when Ambidant offered 30 to 40 per cent interest for deposits. Fareed even fulfilled his promise to some to gain confidence. But in the end he cheated a large number of people,” Kumar told reporters on Wednesday.

“Fareed has told us that he went to Reddy seeking relief from the Enforcement Directorate. But we know more people are involved in the scam,” he added.

“We are also trying to confirm reports in local channels that Reddy has got anticipatory bail.”

Some local channels have reported that a Hyderabad court has granted Reddy anticipatory bail. Reddy has properties in Hyderabad.

Reddy and his brothers Karunakara and Somashekara, collectively known as the “Reddy Brothers”, literally ruled Bellary and helped the BJP build a strong base in the north Karnataka district.

The trouble started when the mining business shut down after a 2011 Lokayukta report accused them of illegal mining and export of iron ore.

Reddy had to resign from the state cabinet before being arrested and sent to judicial custody that lasted more than three years.

The brothers had earlier shot into the political limelight in 1999 when they did all the groundwork for Sushma Swaraj when she contested against Sonia Gandhi in a bypoll for the Bellary Lok Sabha seat.

Sushma even called them her “sons” and was a regular visitor to their home in Bellary.

But she distanced herself from the brothers after the Lokayukta report.