CBI’s ‘clean chit’ to Reddy brothers in mining scam blows holes in BJP’s corruption plank

Heavy mining activities in Karnataka (representational image) | Marco BULGARELLI/Gamma-Rapho via Getty Images

The CBI had, in November, said it could not take forward the probe into the mining scam. But in March, Siddaramaiah announced an SIT to continue the probe.

Ballari: Corruption is a big stick the BJP plans to beat the ruling Congress with in Karnataka, but a quiet ‘clean chit’ given by the CBI in the mining scam involving the controversial Reddy brothers five months before the assembly polls will boomerang on the BJP, the Congress hopes.

Mining baron and former minister G. Janardhan Reddy and his family were part of the BJP establishment when the party ruled Karnataka from 2008 to 2013. The party, however, distanced itself from them after Janardhan Reddy was named as the main suspect in the Rs 16,500 crore illegal mining scam.

But his relatives and close friends are back in favour; seven of them have been given tickets to contest the 12 May elections as the BJP fights to return to power in the only southern state it has ruled in the past.

Documents accessed by ThePrint show that the CBI had, in November, informed chief minister Siddaramaiah that it could not take forward the probe into the mining scam on technical grounds.

But Siddaramaiah sought to counter that in March by announcing a special investigation team to continue the probe, giving the Congress something to hurl back at the BJP every time the issue of corruption comes up on the campaign trail.

So last week, when Karnataka BJP chief and former CM B.S. Yeddyurappa said that he had “pardoned” Janardhan Reddy “in the interests of the state”, Siddaramaiah lost no time in hitting back. The chief minister asked Yeddyurappa if it was up to him to pardon someone “who looted thousands of crores of Kannadigas’ wealth”.

“Did you ask PM Modi to direct CBI to formalise the ‘pardon’?” Siddaramaiah added.

Left to right: Somashekhar Reddy, Karunakar Reddy, Janardhan Reddy and Sriramulu

The ‘scam’

Crores of tonnes of iron ore were allegedly illegally mined in Ballari, and exported from nine ports in Karnataka, Tamil Nadu, Goa and Andhra Pradesh between 2006 and 2011.

Companies linked to the Reddy family also allegedly indulged in under-invoicing, evasion of taxes and other duties, and had links to tax havens such as the Virgin Islands and the Isle of Man. There were also allegations of extortion.

The scam blew up in 2010 when Yeddyurappa was chief minister. In a report, the then-Karnataka Lokayukta, Santosh Hegde, pegged the loss to the exchequer at over Rs 12,000 crore. The Lokayukta named over 700 suspects, including Yeddyurappa himself.

Janardhan Reddy, currently out on bail and barred from entering Ballari by a court, is the main accused in the scam. But the BJP has given tickets to seven of his family members and aides, including his brothers Somashekara and Karunakara, as well as his confidant B. Sriramulu.

The case was handed over to the CBI in 2013, but last November the agency’s offices in three states said they could not be taken forward. Each state office cited a different reason — the Karnataka office said the preliminary inquiry had not been converted into registered cases; the Goa office stated that, prima facie, no case was made out; while the Tamil Nadu office said it could not file a case in the absence of the requisite notification from the Department of Personnel and Training.

When Siddaramaiah’s government swung into action four months later, as election season was hotting up in Karnataka, it handed the probe into six ports to the state SIT — Mangalore and Karwar in Karnataka, Panaji and Mormugao in Goa, and Ennore and Chennai in Tamil Nadu.

Conflict within the BJP

There has been a lot of unease within the BJP about the candidatures of the Reddy brothers and their friends, on account of the corruption allegations. However, sources in the party said courting the brothers was a necessity for the party.

The BJP had distanced itself from the brothers and Sriramulu in the wake of the Lokayukta report, following which the latter set up a party, BSR Congress. In the 2013 election, the BSR Congress (like the Karnataka Janata Paksha founded by Yeddyurappa, also estranged due to corruption allegations) hurt the BJP’s vote share, and the Congress defeated the BJP to assume office in the state.

By the 2014 general elections though, the BSR Congress (and the KJP) had merged with the BJP, and Sriramulu was elected the party’s Ballari MP.

An influential lobby

The mining lobby is said to have a stronghold over certain parts of Karnataka, and its movers and shakers are known to make or break elections for political parties.

The CBI’s letters have given rise to allegations about a possible design to absolve those accused of illegal mining to field them in the upcoming elections.

Sources within the state government alleged that this was part of a “concerted” effort by the NDA to get the powerful lobby on its side. “The mining lobby has been the money bags, and, without them and their influence, the BJP will not be able to win several seats,” a source alleged.

The Congress too is not beyond this equation, and has fielded the Lad brothers, Anil and Santosh. In the 2008 and 2013 elections, the mining lobby, controlled by the Reddys as well as the Lad brothers, took centrestage, although they have been more discreet this time.

The central BJP brass has been trying to maintain its distance from Janardhana Reddy — with party chief Amit Shah reportedly cancelling a campaign visit to avoid being seen with him — but the party has had to rely on the other Reddy brothers and their friends to ensure its victory in the Ballari, Tumkur and Chitradurga regions.