Supreme Court suspends all mining operations in Bellary
NDTV Correspondent, Updated: July 29, 2011 16:20 IST
The court said it was shocked by the extent of the environmental damage in the area. It wants the Karnataka government to take responsibility for restoring the ecological balance here by asking mining companies to pay for the clean-up required.
The court has also asked the government to explain how much iron-ore is required by industry, what percentage of this is met by Bellary, and how much steel produced in India is exported.
The court's questions are similar to those raised by the Karnataka Lokayukta, Santosh Hedge. In his report on illegal mining submitted to the state government this week, Mr Hegde said that politicians like Mr Yeddyurappa have colluded with mining companies to sanction violation of basic laws. Mr Hegde listed a series of mining companies who illegally transport massive amounts of iron-ore to ports for export.
"The greed of a few is making everyone suffer," the Supreme Court judges observed today.
Bellary has 148 mines, of which 98 are located in forest areas and are at the center of the controversy over the environmental problems in the area. At least 40 leases for mining in forests had been declared void a few months ago.
The Supreme Court, after a series of Public Interest Litigation petitions (PILs), had asked a special committee to tour Bellary. After its survey in March, the Centrally Empowered Committee (CEC) said that the Karnataka government had failed to check illegal mining and that there was a connivance between different politicians, officials and companies. The committee warned that at this rate, mineral reserves in the region will be exhausted within 20 years.
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"It is regrettable that ombudsman Justice N. Santosh Hegde recommended to the government to drop me from the cabinet for involvement in illegal mining as one of the directors of the family-run Oballapuram Mining Company (OMC) though I resigned from the post February 27, 2004," Karunakara told reporters here.
The ombudsman's explosive final probe report Thursday indicted the powerful Reddy brothers, along with outgoing chief minister B.S. Yeddyurappa and others, for their criminal involvement in the mining scam and causing Rs.16,085 crore revenue loss to the exchequer from 2006 to 2010 in the form of royalty and taxes.
Karunakara's younger siblings -- infrastructure development and tourism minister G. Janaradhana Reddy and lawmaker G. Somashekara Reddy -- from the mineral rich Bellary region in north Karnataka are directors of OMC, which operate a massive mining business in the neighbouring Andhra Pradesh state and Karnataka.
Referring to his name being mentioned in chapter eight of the report, Reddy senior said he had submitted documentary proof that he was no longer a director in OMC and had no role in the mining business in the affidavit to the Election Commission in March 2004 for contesting from the Bellary parliamentary constituency.
"I have evidence to prove that I have no role in OMC. It is unfortunate my name has been dragged by the Lokayukta in the damning report without verifying documents or giving me an opportunity to defy," Reddy asserted.
Karunakara, who was the ruling Bharatiya Janata Party's (BJP)) Lok Sabha member from Bellary (2004-2008) constituency, currently represents Harpanahalli segment in the 13th state legislative assembly from Davanagere district adjacent to Bellary.
Seeking a public apology from Hegde for causing damage to his fair name and reputation across the state and country, Karunakara said he would meet state Governor H.R. Bhardwaj later in the day with documentary evidence to prove his innocence.
"I have been framed in the probe report without any basis. I have no role in OMC after 2004 and not involved in any mining activity leave alone illegal acts."
Hegde, however, asked him to prove his innocence.
"Let him (Karunakara) come to my office with documents to prove his innocence. I will also show him the documentary evidence our investigative team collected to demonstrate his role in the illegal mining activities of OMC," Hegde told reporters later.
According to the operative part of the probe report, OMC was involved in multi-crore benami (illegal) transactions, under-invoicing and tax evasion by illegally mining in Bellary-Sandur-Hospet region though it did not have mining lease or permit.
Karnataka Lokayukta Santosh Hegde report: Janardhana & Karunakara Reddy hold tremendous influence in Bellary
A day after he submitted his report on the mining scam, Hegde told newspersons that the Karnataka government's response to his reports and recommendations had been "very, very poor".
"As compared to other states, the Lokayukta Act is much more powerful in Karnataka but all this (act in Karnataka) is recommendatory (in nature). It (the state government) never accepted or implemented," said the former Supreme Court judge. He said many of the suggestions made in his interim report on illegal mining, submitted in December 2008, to "straighten up the system" were not acted upon.
In the latest "export-centric" report, Hegde said the Lokayukta has uncovered a "mafia-like" network inBellary and adjacent districts. "You compulsorily have to give 40-45% of your produce and they (big people) will take the entire responsibility of transportation to whichever destination you choose," he said, in an apparent reference to the Reddy brothers, and termed it as "single window corruption system".
The Reddy brothers, who are mining magnates and have tremendous influence in mine-rich Bellary district, are among others who have been indicted by the Lokayukta. Hegde has mentioned in the report three to four companies based in different countries, including Singapore.
Asked if these companies belonged to the Reddy brothers - ministers Janardhana andKarunakara Reddy - Santosh Hegde replied in the affirmative. The Lokayukta has recommended that the issues of "foreign exchange evasion" mentioned in the report be referred to the Enforcement Directorate for probe.
A day after he submitted his report on the mining scam which has led theBJP leadership to ask for Chief Minister B S Yeddyurappa's resignation, Hegde also said his government's track record towards his reports and recommendations was "very, very poor".
"Very, very poor", Hegde, who is retiring on August two, told PTI when asked about the government response in general to his reports and recommendations.
"As compared to other States, the Lokayukta Act is much more powerful in Karnataka but all this (act in Karnataka) is recommendatory (in nature). It (the state government) never accepted or implemented", Hegde, a formerSupreme Court Judge, said.
He said many of his suggestions made in his interim report on illegal mining submitted in December 2008 to "straighten up the system" was not acted upon.
In the latest "export-centric" report, Hegde said the Lokayukta has uncovered a "mafia-like thing" network in Bellary and adjacent districts.
"You compulsorily have to give 40-45 per cent of your produce and they (big people) will take the entire responsibility of transportation to whichever destination you choose", he said, in an apaprent reference to Reddy brothers, and termed it as "single window corruption system".
The Reddy brothers, who are mining magnates and have tremendous influence in mine-rich Bellary district, are among others who have been indicted by the Lokayukta.
He said the suffering of ordinary people in Bellary because of large-scale illegal mining was "heart-rending".
Hegde said in the report, there is a mention of certain three-four companies opened in different countries, including Singapore.
Asked if these companies belonged to Reddy brothers-- Ministers Janardhan and Karunakara--Hegde said: "Yes, yes".
Karnataka-Yeddyurappa scam: Lokayukta Santosh Hegde's report indicts NMDC, Adani Enterprises, JSW Steel in illegal mining scandal
The process of mining, extracting and transporting it is said to be messy with harmful consequences for the environment. Just how dirty it can get can be seen from the pages ofKarnataka Lokayukta Santosh Hegde's report on the state's illegal mining.
In a stinging indictment of politicians, corporates, bureaucrats and policemen, the 464-page report has laid bare the sordid nexus at the heart of the state's illegalmining scandal exposing the myriad ways in which businessmen and politicians colluded to abuse their wealth and power to enrich their coffers.
Rules were flouted and government officials bribed, often indiscriminately; private companies and banks too participated in this loot, throwing to winds all norms of corporate governance and propriety. The scandal, the report adds, has made the state financially weaker and the loss in taxes and royalty is estimated at 16,085 crore. The damage to the environment is much bigger and may never be quantified.
"Law of the land was seemed to have been suspended and oral whip was used to keep silent. Consequently, administration has allowed the loot of natural resources, in this case iron ore, which continued without any opposition. Huge bribes were paid. Mafia-type operations were the routine practices of the day," the report says.
On Thursday, Karnataka Chief Minister BSYeddyurappa resigned, realising the futility of his desperate rearguard action to save his job. Others like Gali Janardhan Reddy, the overlord of Bellary, the iron ore mining hotspot, and a state cabinet minister, may soon follow.
The surprising aspect of Hegde's report is the inclusion of the names of several corporates, who are alleged to have played an unsavoury role in the scam. The report accuses many of them of paying bribes, under-invoicing exports and dealing in fudged permits.
NMDC, the public sector giant, is accused of under-invoicing sales, though to what purpose is not clear.Adani Enterprises, led by Gautam Adani, is accused of paying bribes and permitting illicit iron ore exports through the Belekere port. The Lokayukta has said the company should be blacklisted and barred from bidding for any government contract or tender.
JSW Steel, which became the state's first major steel investor, is accused of not only paying bribes but also of colluding with G Janardhan Reddy to buy illegal ore.
Janardhan Reddy criticised
The JSW group has also been accused of paying excess money to the sons and son-in-law of Yeddyurappa for a land transaction in return for pushing the company's case with the centre for new licences.
Illegal mining in India
Illegal mining in India is widespread in various ore-rich states of India, and has generated controversy, which spans encroachment of forest areas, underpayment of government royalties, conflict with tribals regarding land-rights. The spill-over of the effects of illegal mining into problems such as Naxalism and the distortion of Indian democracy by mixed political and mining interests, has gained international attention.
Illegal iron ore mining in Karnataka
Rising global iron-ore prices driven by Chinese demand brought focus to the iron ore rich Bellary region of Karnataka. This iron ore is alleged to have been illegally mined after paying a minuscule royalty to the government. The major irregularities involve mines in Bellary, including those of Obulapuram Mining Company owned by G. Karunakara Reddy and G. Janardhana Reddy who are ministers in the Government of Karnataka.
Interim Lokayukta report of December 2008
A report  published by the LokAyukta uncovered major violations and systemic corruption in mining in Bellary, including in the allowed geography, encroachment of forest land, massive underpayment of state mining royalties relative to the market price of iron ore and systematic starvation of government mining entities. Justice N. Santosh Hegde resigned from the Lokayukta position on 23 June 2010 citing inability to be effective in his anti-corruption mandate owing to a non-cooperative Government of Karnataka  In January 2010 Mr Kharge questioned the governoment about transfer of Dileepkumar PCCF who refused to sign the report but Government brought S Nagaraja as PCCF who signed the report.
Collusion of officials and politicians in permitting illegal mining
The guidelines under the Central and the state enactments, call for a sketch of the mining area when a mining lease is applied for. It was found by the Lokayukta that sometimes the actual mining areas are not related to the sketch given with the applications without officials crosschecking them. Further mining applicants falsely claim a prohibited forest area as a revenue area. Finally the actual area of the mine is much bigger than the claimed area. The Indian Bureau of Mines rules which control the type of mining, allow a maximum mining depth six metres to prevent environmental degradation. But miners have flouted this rule to over-extract iron-ore. For example, if they are allowed to take 100 metric tones, mines take 1,000 metric tonnes. Officials at road check posts reportedly collude in a massive under-counting of lorries and trucks transporting the iron-ore from the Bellary mines to the ports. News reports suggest that only 200 trucks are reported as against 4000 plying everyday.
Underpayment of royalties to state
There is a huge difference in the market price of the ore and the royalty specified by the government as well as faulty measurement mechanisms of amount of ore extracted. It was found that 35 lakh (3.5 Million) tonnes of ore were illegally exported without paying a rupee of royalty to the exchequer, resulting in a loss of about Rs 1600 crores. With ore prices of USD 100-120 per ton, 3.5 Million tonnes adds up to about 350-400 Million USD. There are proposals to link the royalties to the market price of iron-ore. There is also a proposal by the ministry of Environment and Forests to levy a tax.
According to the Lok Ayukta Report, there have been severe ecological changes due to illegal mining. Certain species of animals, like the sloth bear, that in the Bellary region have disappeared. Medicinal plants from the area do not grow anymore. The entire system of rain has changed in the district of Bellary. It is reported that the entire area surrounding the mining area is denuded of greenery and has no agricultural activity.
Belekeri port scandal
Related is the Belekeri port scam where illegally mined ore which had been seized was surreptitiously exported from the port. Karnataka Chief Minister Yeddyurappa admitted to an illegal iron-ore export racket at Belekeri Port involving 35 lakh metric tonnes of iron ore.
Related road damage, accidents and loss of lives
The lack of effective regulation in the mining and transport of iron ore has adversely impacted road safety. Overloaded Trucks carrying ore have caused hundreds of fatal accidents on the roadways leading to ports such as Belekeri and damaged national highways in the region.
Recommendation to ban iron-ore exports
The Indian government (steel ministry and law ministry) is considering a ban on exports of iron ore and limit mining only to captive iron and steel production units. This has been opposed by the mining ministry citing massive loss of employment.
Lokayukta Report of July 2011
The Lokayukta Report on illegal mining in Karnataka  details the methods in which miners, government officials and ministers colluded to defraud the government of mining revenues. The report details the complete breakdown of democratic governance in the bellary area  and uncovers the "zero risk system", a protection and extortion racket, masterminded by G. Janardhana Reddy. The report describes the illegal money transfers to foreign companies and tax shelters by mining entities such as Obulapuram Mining Company,Associated Mining Company, GLA Trading and GJR Holdings owned by the Reddy Brothers .
Mining permits in Andhra Pradesh
Controversy has arisen over mining permits issued to Rakshana Steels, linked to Anil Kumar, the son-in-law of the former chief minister Y. S. Rajasekhar Reddy, over 137,000 Acres (554.5 km2) of land in Andhra Pradesh. The A.P. Mining development corporation is said to have entered into a joint venture agreement in 2009 with Hyderabad-based Rakshana Steels for mining iron ore in Khammam and Warangaldistricts.
Illegal mining in the Aravali Range
Bauxite and coal mining in Orissa
Illegal mining and stone crushing in Ganga river bed
Illegal mining in Ganga river riverbed for stones and sand for construction work has been a long problem in Haridwar district, Uttarakhand, where it touches the plains for the first time. This is despite the fact that quarrying has been banned in Kumbh Mela area zone covering 140 sq km area in Haridwar. On June 14, Swami Nigamanada, a 34-year old monk who was fasting since February 19, 2011 against illegal mining and stone crushing along the Ganga near Haridwar, died at the Himalayan Hospital in Jollygrant in Dehradun, after alleged poisoning by stone crushing mafia.  His death put spotlight on the activity including intervention by Union Environment minister.
Union government commission to probe illegal mining
The mining ministry of the union government has announced a special commission to investigate the various cases of illegal mining in India. The union mining minister, B. K. Handique, announced that the investigation spanning Karnataka, Orissa and Jharkhand, will submit a report in 6 months.
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- New York Times Slideshow - India's Mining Magnates