Even Centre admits: Our men scared of Reddys

One of the miners is Tapal Ganesh,whose January 2009 petition before the Supreme Court rocked the entire mining industry. The influential Reddys,Ganesh claimed in his petition,had encroached on his 11-hectare Tumti Mines,which borders the 68.5-hectare mine of their Obulapuram Mining Company (OMC). The Reddys deny the charge but this was the first time someone had openly challenged their clout. The next hearing in the case is on March 22.

“This was plain landgrab and no one had taken it up the way I did,” says Ganesh,who followed up his petition with an Interim Application (IA) on May 1,2009 in the writ petition filed by another big rival of the Reddys,S K Modi,the owner of Bellary Iron Ores Private Ltd (BIOP). In his petition,Modi,one of the biggest miners in the region,had sought demarcation of boundaries by the Survey of India in a timebound manner. He met The Indian Express but declined to be quoted on the dispute.

None other than Union Mines Minister B K Handique backs Ganesh’s testimony.

“It is not that the Reddy brothers themselves come and throw them (their rivals) out. They will never do that. He (Janardhana Reddy) is a Minister. They have private soldiers. They call it their private army. I tell you that even our officials of IBM (Indian Bureau of Mines,the mining regulator) are scared.”

“We have to sometimes call them here (Delhi) and give them encouragement. We tell them that we are with you… otherwise everybody is scared,” says Handique.

Ganesh’s application sought to implead the Central Empowered Committee (CEC) of the Supreme Court and eventually led to the CEC preparing a detailed report on alleged irregularities by the Reddy brothers.

The CEC submitted its report to the Supreme Court on November 19,2009,and recommended to the Andhra Pradesh government on November 23 that mining operations in six leases (four to Reddys,one to Modi and the last to Y Mahabaleswarappa & Sons) be suspended. The state suspended all activities on November 25. The case was further heard in the Andhra Pradesh High Court,which on February 26 set aside the suspension and noted that the CEC should have given a notice to the Reddys before submitting its report. The Reddys soon obtained permits to restart mining.

“There were many who told me I was waging a futile war and even said the Reddys may be willing to settle out of court,but I didn’t. There are about 70 active mines in the Bellary-Hospet-Sandhur belt. Of these,more than 60 per cent have succumbed and have let the Reddys raise a contract in their mines or offered them a share in revenue. Sab bik gaye,” says Ganesh.

RAISING A CONTRACT

IF TAPAL Ganesh makes his defiance public,another influential miner doesn’t want his name to be used. He meets The Indian Express on the condition that he be identified only as “a leading Congress politician” with mines in Hospet.

“I hung on for almost eight months from April 2009,” he says,“but I finally had to give in because global iron ore prices may not remain high forever and I do not want to lose out.”

He claims to have agreed to “pay a share of the revenue in return for obtaining permits ”. When asked why he did not go public at even a party forum,he says: “Some of my leaders have taken note. The CBI probe,agreed to by the Andhra government,is a result of their intervention.”

Mines Minister Handique says that even the Prime Minister is aware of the situation in Bellary. “The Prime Minister is unhappy. All these things we have been doing is as desired by the PM. When illegal mining hogs the headlines,can the Prime Minister of any country remain indifferent? He cannot remain indifferent,” he says.

Indeed,after Andhra Chief Minister Y S Rajasekhara Reddy died in a plane crash on September 3,2009,things took a turn for the worse for the Reddys. The Andhra government agreed to the CBI probe offered by the Centre,but says Handique,Karnataka Chief Minister B S Yeddyurappa said “there was no need for it”.

Chandrababu Naidu’s Telugu Desam Party has routinely alleged a strong “political-business nexus” between YSR and Janardhana Reddy. “It was,in fact,YSR’s idea to allot mines to OMC along the Andhra-Karnataka forest borders. Disputes take years to be resolved,by which time the lease itself will expire,” says M V Mysura Reddy,Rajya Sabha MP,who has prepared a dossier on what the TDP alleges is the state’s “mining mafia”.

While the Hospet Congress politician (referred to above) claims to have agreed to “share 15 per cent” of the output in value,others just let the Reddys “raise a contract” with them,a practice that is rife though illegal,as explained in the report by Karnataka Lokayukta Santosh Hegde.

Speaking to The Indian Express,Justice Hegde explains how difficult it can be to monitor illegal mining. “Raising a contract” gives the contractor the right to extract,transport and sell iron ore from the mine of an original lessee. In return,the lessee gets a percentage of the output — between 15 per cent and 40 per cent — in cash or physical form itself.

“Such deals suit the Reddys most since their names do not figure in official records. There is no paper trail. Even if there is one,nobody wants to share it. We all know it’s happening,” says Justice Hegde,who extensively toured the Bellary-Hospet-Sandhur belt for his 282-page report.

“Raising a contract allows the Reddys to use their labour and capital but some other miner’s land to extract iron ore. My estimate is that in the Bellary region,the Reddys,with the district administration under their control,have muscled their way into many leases. This is how they achieved unprecedented scale and phenomenal wealth in a short period,” says Justice Hegde.

BORDERS BLURRED

KALLOL BISWAS,Deputy Conservator of Forests,Anantapur,where the Reddy mines are located,refers to the “partnership agreements” that OMC has with mines in Karnataka adjoining theirs in Malapanagudi and Siddhapuram villages in Andhra Pradesh. “These help the Reddys mine iron ore in Karnataka,transport it to Andhra Pradesh and show it as production from the mines they have in Andhra,” says a Karnataka official who spoke on the condition that he not be identified.

In one of the seven notices issued to OMC and Anantapur Mining Corporation in October-November 2009,Biswas says OMC obtained transport permits from the Mines and Geology Department in Andhra but illegally got iron ore from mines in Karnataka. “It is noticed that lorries are coming from Karnataka and passing through wide roads illegally laid in the Reddys’ lease area (68.5 hectares) carrying high-grade iron ore,” Biswas pointed out in his notice of November 1,2009,to OMC.

This is corroborated by none other than V D Rajagopal,Director,Mines and Geology Department,Andhra Pradesh,whose office gives mining permits and also recommends leases. “Andhra Pradesh had 70,000 trucks illegally entering the state from Karnataka. We imposed penalties but let them in. It is for Karnataka to ensure the lorries do not cross state boundaries,” he told The Indian Express,adding,however,that these trucks did not belong to OMC. Rivals of the Reddy brothers claim that since OMC does not have mines in Karnataka,iron ore cannot be obviously shown as being transported from Bellary into Andhra Pradesh.

The “partnership agreements” that Biswas talks about are not necessarily mutually acceptable. “As has been told to me… the Reddys are demanding a cut from others who are raising money,otherwise they will not get any permits. The only vehicles that are stopped without a permit or documentation are of those who did not give the Reddys their share,” Justice Hegde says.

Janardhana Reddy,of course,denies this. Responding to the allegations in a detailed interview to The Indian Express (to be carried in a later part of this series),he asks for proof. “I will never do such a cheap activity. Tell me who is it. If he claims he has agreed to share revenue with us,let him show the evidence,” he says when asked about the Congress politician’s allegations.

These aren’t the only complaints. According to the Indian Bureau of Mines,the number of complaints from Bellary have increased over the last two years.

For instance,the Reddys’ arch rival Rahul Baldota,promoter of MSPL Ltd,who has five mines in the region,alleges that his mine in Vyasanakere has been encroached by mines belonging to a “friend” of the Reddys,BJP MLA Anand Singh. “I have personally complained to the Union Mines Minister,” says Baldota.

“They trespassed into unallocated land,paid little heed to Motor Vehicles Act,misused permits and transported ore without paying forest development tax,octroi,” says Tapal Ganesh. “This is famously known in Bellary as the zero concept — where no money is paid in Karnataka while transporting ore to ports,” adds Baldota.

Investigators say that in the two years in which the Reddys emerged kingmakers in the state,they got many miners to accept their terms by getting district officials such as the Deputy Forest Officer or the Deputy Director,Mining & Geology Department,in Hospet to block permits.

Those who did not fall in line could still mine but their applications for transport permits remained in files. Baldota did not give in and knocked at the CM’s office in Bangalore and at the Mines Minister’s in New Delhi. Only early this week he received his first transport permit.

Asked why the delay,B Muthaiah,Deputy Conservator of Forests,Bellary,told The Indian Express: “MSPL has outstanding royalties of about Rs 90 crore. In some cases we have given permits following directions from the courts. We have given the records of these dues to the courts.”

As reported yesterday,the Forest Department is only one wing of the state that is alleged to have bent over backwards to help the Reddys. There are others in the state and even ministries at the Centre which have helped the Reddys by merely looking the other way.