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EXPOSED: Power abuse in the republic of Bellary

Vicky Nanjappa explores Justice Santosh Hegde's report on illegal mining in Karnataka and finds out a shocking case of abuse of power and guidelines in Bellary

People call it the republic of Bellary. Flouting norms and use of official power to earn unimaginable amounts from illegal mining is common in this district in Karnataka.

With a new chief minister taking over in Karnataka, the focus is now on the mining magnates from Bellary -- the Reddy brothers.

The Lokayukta report, which claimed the head of B S Yeddyurappa, digs deep into the activities in Bellary and on several ocassions has recommended that Gali Janardhan Reddy (one of the Reddy brothers) should be kept out of the cabinet.

The reason why such a recommendation has been made is chapter seven of Justice Santosh Hegde's report on illegal mining titled 'Associated Mining Company -- a pool of illegalities', which is not only shocking but spells out clearly how official power has been flouted to bring in the riches. 

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Power abuse in the republic of Bellary

The Associated Mining Company was granted a mining lease for a period of 30 years on March 2, 1966 and as per the conditions it was permitted to mine in an area of 16.9 hectares in Venkatagiri village of Sandur taluk, Ramghad forest block, Bellary district for winning of iron ore mineral.

The lease period expired on March 1, 1996. The first renewal was effected on March 24, 2000. This means that there was a gap of four years between the expiry of the lease and the first renewal in the year 2000. Hence, there was no continuity for this renewal.

Justice Hegde, in his report, points out that the first renewal is in violation of the Mines and Minerals Act and that there was no approval from the central government for this deviation. Moreover, the then minster for mines in Karnataka, V Muniyappa, had approved this renewal contrary to the recommendations of the secretary (mines).

The then director (mines) has submitted incorrect information to the Government of India regarding the facts of lease period and its renewals.

Power abuse in the republic of Bellary

The report shows that the mining lease granted in favour of Associated Mining Company has since been taken over presently by all together new managing partners through backdoor entry to overcome the law. The new managing partners are G Janaradhana Reddy and his wife Lakshmi Aruna.

Janardhan Reddy and Lakshmi Aruna formed part of the management in the year 2010 after which they opened up an account in the State Bank of India, Bellary, which again was not intimated to the Commercial Taxes Department for the collection of VAT.

Instead, the old account no 1425201000179 of Canara Bank, Bellary has been reported to the CTD while having new registration for VAT.

The then Director (Mines) Shivalinga Murthy approved the issuance of Mining Department Permit without taking approval of central government for transfer of rights or interest to new managing partners. He was not the competent authority to do so.

In the new account of AMC in SBI Bellary a/c no 31000313003, there is a debit of Rs 269,15,73,602 and credit of Rs 270,60,93,762 after 01-08-2009 to March 2, 2011. There are many huge transactions in the said account.

The transaction gives the linkages between the Associated Mining Company and other companies/firms/individuals. There is credit of Rs 14 crore from Janadevi Minerals on May 31, 2010 and July 19, 2010 in the account of AMC. There were no permits issued as a party/purchaser from AMC.

Power abuse in the republic of Bellary

The Janadevi Minerals is also a front company/firm of ILC. Likewise, 34,15,00,000 (thirty four crores fifteen lakhs) have been credited from the account of Lakshmi Aruna Minerals on June 25, 2010, July 31, 2010, August 20, 2010 and August 30, 2010 in the account of AMC (SBI 3003).

G Lakshmi Aruna is the managing partner in both firms. There is another credit of Rs 3 crore on May 7, 2010 from HDFC Bank of Eagle Traders and Logistics.

There are more transactions of this kind in this account. The money has been credited to this account through circuitous route. This indicates illegal activities of AMC in collusion with other companies.

It is pertinent to state here that royalty has been paid from the bank account of AMC (SBI, Bellary A/c no. 3003) to get issue MDP of the BRY Mines ML No 2186. An amount of Rs 96,8 lakh and Rs 87.44 lakh have been paid in the form of demand draft favouring deputy director, mines, Hospet.

Power abuse in the republic of Bellary

The permit numbers 5771884 (dated May 22, 2010) and 571740 were issued. The permits were issued to transfer iron ore from BRY lease to JSW and Lakshmi Aruna Minerals has been stated as purchaser.

As observed, the lease of Yogendranath Singh (proxy mine owner) -- in the said lease there was no iron ore available. Hence these permits were used in proxy to transport iron ore from unknown source.

Further, there are debits from this account (SBI 3003) to Sri Bhakta Markandeshwara Minerals (SBMM) (Axis 2669), Divakar Minerals, JJ Impex, Shantha Lakshmi Jairam, Brahamini Industries, Vijay Mining Infrastructure and many others. The trail of huge amount in this account (SBI 3003) is allegedly linked with the illicit removal of ore from various mines.

Power abuse in the republic of Bellary

Issue of permits: There is a shocking revelation in the report as to how 900 transit permits have been issued after expiry of lease period. This is a blatant misuse and action should be initiated against the concerned foresters, range forest officer and deputy conservator of forests, Bellary.

The lease expired on March 23, 2010 the validity of the permits also expiries accordingly.

Hence iron ore supplied from March 24, 2010 is illegal and unlawful. The quantity of 3,03,573 MT of iron ore supplied since March 24, 2010 to JSW by Associated Mining Company is illegal. There are no permits with AMC as a party issued from deputy director, mines, Hospet and deputy conservator of forests, Bellary.

It is presumed that either the mining activities continued after the expiry of lease period or the iron ore was supplied from unknown source. The market cost of the entire quantity of 3,03.573 MT iron ore should be recovered from the lessee with exemplary penalty. Further any other legal action should also be initiated.

The deputy conservator of forests, Bellary has issued transit permits on March 22, 2010 for transportation of 80,000 MT iron ore from the lease in two days. This is misuse of power and authority without application of mind. The deputy conservator of forests showed undue favour and facilitated illegal mining activities.

Power abuse in the republic of Bellary

The deputy conservator of forests issued an order dated March 22, 2010 for deputing 17 foresters in addition to the already engaged for the purpose of issue of Form no 27. All the foresters were called at the range office and asked to sign the Form no 27 sitting in the range forest office.

The transit permits were signed in the range office under threat as confessed unanimously by them. This is nothing but misuse of authority and powers.

Further, there is hardly 10 million tons iron ore reserve left out in the leased area and with the present rate of production it will last for another 9-10 years only of the grade 60 plus.

The recommendations at the end of chapter seven of the report calls for stringent action against all those involved in this episode. However, the strongest recommendation is against Janardhan Reddy 'in view of the misconduct of Janardhana Reddy, minister, noted in this Chapter, I recommend to the competent authority for his removal from the Cabinet.'