Many Tibetans scoff at the spying allegations. But the episode starkly exposes the precarious position of the Dalai Lama and the exiled movement of Tibetan Buddhism he has led since he fled China in 1959. The Tibetan cause depends heavily on Indian good will, particularly as China has intensified efforts to discredit and infiltrate their exile organization.  Tensions are rising between India and China over a variety of issues, including Tibet. Sophisticated hackers, traced to China, have penetrated computer systems in Dharamsala and at Indian government ministries. China has long blamed Tibetan exiles in India for fueling instability across the border in Tibet. But now India, too, seems more wary of Tibetan activities; the Indian police are investigating new Tibetan monasteries near the border for possible ties to China, a police official said.  Meanwhile, Chinese leaders are betting that the Tibetan movement will fracture after the eventual death of the Dalai Lama, who is 74; they have even declared their intent to name his successor.  Indian suspicions about the Karmapa are a particular problem. He has a global following and, at 25 years old, he is viewed as a potential future leader of the movement — a possibility deeply compromised if Indian authorities consider him a foreign agent.  “What Tibetans must address is the idea that Tibetans could be considered a security threat to India and not an asset,” said Tsering Shakya, a leading Tibet specialist. “But the idea that a boy at the age of 14 was selected as a covert agent by a foreign government to destabilize India — and the assumption the boy will assume leadership of the Tibetan movement and eventually work against India — is worthy of a cheap spy novel.”  For the past week, Tibetans have rallied behind the Karmapa, with thousands of monks holding candlelight vigils at his residence. Tibet’s political leaders, including the Dalai Lama, have called on the Karmapa’s aides to correct any financial irregularities but have dismissed any suspicions about the Karmapa’s being a Chinese agent.  “Baseless, all baseless,” said Samdhong Rinpoche, the prime minister of the Tibetan government in exile. “Not a fraction of anything that has a base of truth.”  Many Indian intelligence agents have distrusted the Karmapa from the start. He was a unique case, since both the Dalai Lama and the Chinese government had endorsed him. He would explain his escape as an act of principle; he was being pressured to denounce the Dalai Lama, and Chinese officials also were forbidding him to study with high lamas outside China. Many investigators were unconvinced, wondering how such an important figure could slip so easily over the border.  On Wednesday, when the procession of monks arrived to offer support, the Karmapa described the current controversy as a “misunderstanding” and expressed confidence in the fairness of Indian authorities.  “We all have taken refuge and settled here,” he said. “India, in contrast to Communist China, is a democratic country that is based on the rule of law. Therefore, I trust that things will improve and the truth will become clear in time.”  Within Tibetan Buddhism, the Karmapa ranks third after the Dalai Lama and the Panchen Lama, with each man believed to be reincarnated through the centuries. After the death of the previous Karmapa, a bitter feud broke out between the high lamas charged with identifying his successor: at least two other people now claim to be the Karmapa, though a majority of Tibetans, including the Dalai Lama, recognize Ogyen Trinley Dorje.  But this dispute has complicated efforts by the Karmapa to claim the monastery built by his predecessor in the Indian border region of Sikkim. Indian officials have blocked him from taking ownership until claims from rival Tibetan factions are resolved — which is why, given the uncertainty over the duration of the legal fight, the Karmapa sought land for a new monastery, his aides say.  The land deal led to the current controversy. On Jan. 26, India’s Republic Day, police officers apprehended two men at a highway checkpoint after discovering about $219,000 in Indian rupees inside their car — money they said had come from the Karmapa. The next day, the police raided the Gyuto Monastery and found boxes of cash from more than 20 countries, including China; officers arrested the financial officer overseeing the Karmapa’s charitable trust and continue to investigate the Karmapa himself.  “He ran from China,” said P. L. Thakur, the police inspector general in Dharamsala. “Tibet is under China. Why and how has this currency come here? For what purpose? Why was it being kept there?”  Naresh Mathur, one of the Karmapa’s lawyers, said the money was from the devotees who for the past decade had come from around the world for the Karmapa’s blessing. By custom, they leave an offering, usually envelopes of cash; the Chinese renminbi, he said, are from Tibetans or other Chinese who have made a pilgrimage to Dharamsala.  Mr. Mathur said the Karmapa’s aides were unable to deposit the money because they were awaiting a decision on their application — made several years ago — for government approval to accept foreign currency. In the interim, they say, the money is stored where the officers found it — in boxes kept in a dorm room shared by monks.  Mr. Mathur also denied any suggestion that the land deal was secretive or illegal, and he said that it was the seller who demanded cash.  On Friday, the Karmapa offered blessings to devotees who lined up to meet him in his fourth-floor reception room. Among them was a group of Chinese followers from the manufacturing hub of Shenzhen. Aides say that bookkeeping mistakes may have been made in recording the donations, but that the intent is to handle the money the right way.  “We will be making changes,” said Deki Chungyalpa, a spokeswoman for the Karmapa. “Like hiring a professional accountant who is not a monk.”  For many Tibetans, the broader concern is about the future of the Tibetan movement itself. Tenzin Tsundue is a Tibetan activist who once unfurled a “Free Tibet” banner at an appearance by President Hu Jintao of China. He says India has always been a steadfast friend of Tibetans, providing a home for as many as 120,000 Tibetan refugees, yet now he worries its support may be wavering.  “This country that we are so grateful to is alleging the Karmapa is a spy for China,” he said. “And we can’t understand that at all.”  A version of this article appears in print on February 8, 2011, on Page A1 of the New York edition with the headline: As India Scrutinizes a Lama, Signs of a Wary Eye on Tibetans. Order Reprints| Today's Paper|Subscribe
One of Tibetan Buddhism’s most revered incarnate lamas has seen his quest for a monastery unexpectedly set off a national furor, fanned by Indian media.