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Rs 215 cr: Amount Reddy brothers have stashed abroad
A part of the Lokayukta Santosh Hegde's voluminous report on illegal mining, which has rocked the Karnataka government, deals specifically on the role of the Reddy brothers of Bellary in the multi-crore scam. Vicky Nanjappa reports
Lokayukta Santosh Hegde's explosive report per se speaks in great deal about how the Reddy brothers have under invoiced their iron ore exports to Singapore and parked money in tax havens abroad.
A chapter in the mining report titled Under Invoicing, Evasion of Taxes and Duties by Obulapuram Mining Company has this interesting story to tell about how the Reddy brothers have stashed away Rs 215,12,50,357 outside the country.
Further, it also negates the Reddy brothers' claim that they have no mining interest in Karnataka.
M/s Obulapuram Mining Company Private Limited, Ennoble House, Raghavachari Road, Bellary had the following Directors at the relevant time -- G Janardhana Reddy, G Lakshmi Aruna, G Karunakara Reddy, D Parameshwara Reddy, B Sree Ramulu.
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Rs 215 cr: Amount Reddy brothers have stashed abroad
The report further states that a private company by the name Man-Go Pub Pte Limited was registered in the year 2004 at Singapore and the purpose of this company was to provide entertainment, food and beverage.
In 2007, there was a special resolution passed in which the principal activities of this company were also proposed to be changed from restaurant Bars and Canteen to general whole sale trade, including general imports and exports.
Janardhan Reddy was appointed as director of this company.
One share of this company i.e. GLA was transferred in favour of GJR Holdings International Limited with its address at Isle of Man on December 21 2007 and same transaction was lodged with ACRA on January 4 2008.
Rs 215 cr: Amount Reddy brothers have stashed abroad
Again, it should be noted that the letter GJR in this company refers to Gali Janardhana Reddy and the company is registered in Isle of Man, an internationally known "tax heaven".
The said share was further transferred in favour of Interlink Services Group Limited, British Virgin Islands in June 2009. The British Virgin is also known to be a "tax heaven". The role of GJR Holdings International
Limited and Interlink Services Group Limited under the above circumstances, requires further probe by the competent authorities.
It is to be noted that after the enquiry into the illegal exportation was initiated by Lokayukta, Janardhana Reddy ceased to be the director of the above company with effect from December 30, 2009 by resignation.
Rs 215 cr: Amount Reddy brothers have stashed abroad
During the period G Janardhana Reddy was the company's director, the GLA Pet Limited had imported iron ore to the tune of 8,52,033 MTs from OMC, Bellary -- the origin of the ore is shown at ports from Karnataka.
There was no export of iron ore, before or after the period when Gali Janardhana Reddy was the GLA's director, from OMC. This is seen from the export data obtained from customs department.
An assessment order shows under invoicing of cost of iron ore, export sales to GLA Trading International Limited, Dubai by OMC. It may be seen for the purpose of understanding the modus operandi of OMC in exporting the iron ores.
The said assessment order clearly makes out a case of relationship between the OMC and GLA Trading International Limited, Dubai.
Rs 215 cr: Amount Reddy brothers have stashed abroad
Having noticed the details of export of iron ore made by this company (OMC), all details of export of iron ore was sought from the customs departments of Kakinada, Krishnapatnam, Vishakapatnam, Chennai, Mangalore, Belekeri, Karwar, Murmagao and Panaji.
The details are further verified by the investigation team with regard to GLA as consignee. The details of Mangalore Port has not been taken into consideration, since there is not much difference found during the month of October 2008.
The details received also shows that there is no export from Belikeri, Karwar, Murmagao and Panaji ports by OMC to GLA. However, the Customs House, Kakinada has given information/particulars of export made by OMC to GLA, Dubai. It is interesting to note that most of the exports were shown as originating from Karnataka.
Rs 215 cr: Amount Reddy brothers have stashed abroad
Similarly, the report pertaining to Krishnapatnam, Vishakapatnam Ports also indicates such exports. OMC has exported 8,09,299 MTs (excluding exports from Mangalore) to GLA in the year 2007-08 and 2008- 09.
The total under invoicing in US $ and INR comes to $52,341,292.00 corresponding to Rs 215,12,50,387.00. The face value of the US$ was taken at the prevailing rate during that time. At this stage, it should be noted that this Under Invoicing has caused loss to the government from export made to GLA by OMC for two years i.e. 2007-08 and 2008-09 only.
It is also to be noted that the foreign exchange involved in this case, has not come to Union of India and indicates that this amount might have been parked in some banks in tax heaven countries.
Therefore, it is necessary that the competent department should be asked to investigate as to where this money is parked and approximately a sum of Rs 215,12,50,357.00 which should have been profit of the government from OMC and consequent to evasion of customs duty, income tax and other taxes should be investigated and collected by the respective department, the Lokayukta has recommended.