Mining baron helped BJP form its first govt in the South and dominated state politics for years, but has now been arrested in a Rs 600-crore Ponzi scam case.
Bengaluru: Gali Janardhana Reddy has always been controversy’s child, so it’s no surprise that he finds himself mired in another one. And now, the Central Crime Branch (CCB) of the Karnataka Police in Bengaluru arrested him Sunday for links to a Rs 600-crore Ponzi scam.
The mining baron and former Karnataka minister has earned a reputation for being in the headlines for all the wrong reasons, ever since he entered public life with the BJP.
From being jailed on illegal mining charges, being the target of rival party jibes ahead of elections, being under the scanner for a flamboyant lifestyle, to being sidelined by his own party — the BJP leader has time and again landed on the wrong foot, only to resurrect his political career each time.
This time, however, critics say the odds might be too much for even Reddy to surmount.
Already reeling under the BJP’s Lok Sabha bypoll defeat in his fiefdom of Ballari — the first time in 14 years that the party has lost the seat — Reddy, who was on the run for close to five days, finally appeared before the CCB to claim his innocence. But the CCB says it has definite leads that show Reddy was involved in the Ponzi scam.
The CCB alleges that Reddy took 57 kg of gold from Syed Ahmed Fareed, an accused in the case, promising to get him off the hook by allegedly bribing Enforcement Directorate (ED) officials probing the scam.
Not absconding
In a strategy typical of Reddy, he made a dramatic revelation that he was not absconding by first releasing a video. He said: “I was told by my lawyers not to worry about the media reports. They advised that only if I’m issued a notice do I have to appear before the police.
“Now that I have received the notice, I will appear for questioning and I will extend my full support.”
Soon after, Reddy appeared with his lawyer at the CCB office, claiming he was “innocent” and “it was the police who were feeding false information to the media” about him.
Reddy said he was being framed and said he would go to any extent to prove his innocence.
A constable’s son
While Reddy and his brothers — G. Karunakara Reddy and G. Somashekhara Reddy — dominate politics in Karnataka, they were born across the border, in Chittoor district of undivided Andhra Pradesh.
The brothers were the sons of a police constable and launched businesses in Andhra Pradesh that failed to take off. They then migrated to neighbouring Ballari, then Bellary, in the early 1980s.
They continued to have little luck with businesses, including an attempt to set up shop in the Rayalaseema region of AP.
Their fortunes finally began changing in 2001, when they entered the iron-ore mining business by setting up the Obalapuram Mining Company (OMC), at a meagre amount of Rs 10 lakh, with the help of former Andhra CM Y.S.R. Reddy’s family.
The brothers successfully skewed the trade by allegedly taking advantage of the border — they would allegedly set up shop in one state, spread their wings to the other, and pay royalties to neither.
By 2004, profits began to show, and the OMC recorded a turnover of over Rs 35 crore. By then, the brothers had, directly and indirectly, taken over several mines in Karnataka and Andhra Pradesh.
From 2006 onwards, a mineral-hungry China, which was also building infrastructure for the 2008 Beijing Olympics, fuelled an unprecedented demand for iron ore.
The Reddy brothers capitalised on this opportunity to build their mining empire; their OMC accounted for a lion’s share of the iron ore exports to China.
Since Janardhana Reddy had a good relationship with Y.S. Rajasekhara Reddy and his father Y.S. Raja Reddy, it allowed him to grow his business ventures in Andhra’s Ananthapur region during YSR’s tenure.
For over a decade, the three brothers were allegedly involved in illegal mining and extraction of iron-ore. They were also accused of receiving a 30 per cent cut from every mine-owner in the district, resulting in a revenue loss of Rs 3,414.45 crore to Karnataka.
The brothers are also known for an opulent lifestyle, including owning several high-end cars and even a helicopter.
They drew flak in 2016 when in the middle of demonetisation, Janardhana Reddy held a lavish wedding for his daughter Brahmani. The wedding, estimated to have cost Rs 500 crore, saw the Vijayanagara Empire recreated at the venue in Bengaluru, and had Brazilian dancers, among other performers.
Also read: CBI’s ‘clean chit’ to Reddy brothers in mining scam blows holes in BJP’s corruption plank
Political climbers
Along with their mining business, the Reddy brothers had political aspirations as well. Their first foray into public life was in a high-stakes bitter political battle during the 1999 Lok Sabha elections.
The elections saw the BJP’s Sushma Swaraj pitted against then-Congress president Sonia Gandhi for the Bellary Lok Sabha seat. Janardhana Reddy played a big role in the election as the brothers pledged their support to their thaayi (mother), Swaraj.
Though Swaraj lost, Janardhana Reddy’s involvement paved the way for the brothers to take control of the BJP legislators in the region. Their political clout had expanded such that they were, and are still, considered the BJP’s ‘money bags’.
In the 2004 assembly elections, when the BJP emerged as the single largest party with 79 seats, the party’s showing was credited to the brothers’ funding.
When the BJP was part of the government in 2006, having allied with the JD(S), the party’s CM aspirant B.S. Yeddyurappa rewarded Janardhana Reddy the tourism and infrastructure development portfolio.
The high point for the Reddy brothers’ association with the BJP would come in the 2008 assembly elections, when the saffron outfit opened its account in a southern state for the first time in its history.
The BJP secured 110 seats in the elections, but fell three short of the majority in the 224-member assembly. The Reddy brothers stepped in, launching the now infamous poaching exercise, Operation Kamala, through which they secured the support of six independents and opposition MLAs, amid allegations that a large amount of money had changed hands.
That honeymoon lasted till 2011, when Yeddyurappa had to resign after the state Lokayukta indicted him in the illegal mining cases. The same year, the CBI took Janardhana Reddy into custody in the case.
The Reddy brothers were then sidelined from the party, only to be brought back to prominence by BJP national president Amit Shah at the behest of Yeddyurappa.
In 2015, Janardhana Reddy was arrested again, this time by a SIT constituted by the Lokayukta in the mining case. “We arrested Janardhana Reddy in the illegal mining case involving his Black Gold Iron Ore Mines and Minerals Company. He was arrested after he was summoned for interrogation by the SIT,” said the then-Inspector General of Police (Lokayukta SIT) K.S.R Charan Reddy.
The Lokayukta SIT arrested him on the charges of illegal extraction, transportation of iron ore, cheating, misappropriation and abuse of power by a public servant. The OMC had also been accused of tampering with lease-boundary markings and indulging in illegal iron-ore mining in the Ballari reserve forest area, which spread from the region to Ananthapur in Andhra Pradesh.
After these developments, the BJP had decided to keep the youngest Reddy brother at an arm’s distance and, to an extent, even excluded him from party activities.
That, however, didn’t last long. For the 2018 elections, the BJP once again had to rely on the Reddy brothers to maintain its stranglehold on Ballari, Chitradurga and Kalaburagi (Gulbarga).
While the BJP kept Janardhana Reddy out of the poll process, it did hand tickets to Karunakara and Somashekhara, aware it would lose the region if it didn’t. The duo won —Somashekhara from Ballari City, Karunakara from Harapanahalli.
The latest setback in the Ballari Lok Sabha bypoll and the case against Janardhana Reddy could test the BJP’s resolve in the sticking with the brothers, particularly ahead of the 2019 Lok Sabha polls.
Also read: Despite return of Reddy brothers, BJP finds little fortune in Ballari’s political mines
Shame on Modi and Shah. Such a person they have in their party.
Janardhana Reddy being linked to a 600 crore Ponzi scheme suggests the family has burnt through a large part of its mining fortune.