No Scope for Reddy Redemption

Janardhan and Jagan have been partners in ways so clear and clever that they cannot but drag each other down

BANGALORE ~ Karnataka politician Gali Janardhan Reddy’s arrest in the Andhra illegal mining case has scooped up more dirt than Kadapa MP Jaganmohan Reddy can handle. The Central Bureau of Investigation (CBI), let loose on the recalcitrant Jagan after he made repeated attempts to split the Andhra Congress in his quest to inherit the CM’s mantle after his father YS Rajasekhar Reddy’s death in 2009, has established that the two Reddys, though separated by a state border and of different political allegiances, were using their political power with impunity to subvert laws that came in the way of their common quest for personal enrichment.

For Janardhan, a former Karnataka minister and member of the state’s upper house, the Andhra case is only the proverbial tip of the iceberg, as the quartet that he was heading—infamously known as the ‘Reddy brothers’ though it included their associate B Sriramulu who recently resigned from the BJP—is expected to face an avalanche of cases after the Karnataka government sifts through the recommendations of the state Lokayukta’s explosive mining report. The report has accused them of running a parallel fiefdom in Bellary district and having accumulated huge monies from illegal mining.

If BJP sources are to be believed, DV Sadananda Gowda’s new government in Karnataka was at risk of paying a price for distancing the Reddy brothers in the aftermath of the mining scam, since the brothers were planning a regional political outfit of their own. Sriramulu’s resignation was only a start. But then came the CBI’s arrest of Janardhan, halting the brothers in their tracks.

An angry Jagan, on being asked by journalists for his reaction to the arrest, sought to lecture journalists on the finer points of relevant questions. But Jagan cannot distance himself from this case, nor deny his ties with the Bellary Reddys. It’s not for nothing that the CBI has indicated that it would question him next, even as incriminating evidence dating back to the YSR regime piles up. There exists enough, for example, to level the charge that the Reddys transferred their gains to some of Jagan’s companies in lieu of YSR’s turning a blind eye to their illegal shovelling of iron ore in Andhra territory. Big sums were made. According to a preliminary inquiry in November 2010 by the Supreme Court’s Central Empowered Committee, the Reddy brothers had exported 19.7 million tonnes of iron ore worth Rs 5,308 crore mined from encroached forest and non-leased areas in Andhra Pradesh.

After many such facts have tumbled into the public domain, the late YSR’s regime is being reassessed in the light of both what went on under his watch and how Jagan’s businesses expanded. It wasn’t just a matter of looking the other way. According to the CBI’s chargesheet, YSR’s act of renewing an expired lease helped Janardhan Reddy’s Obulapuram Mining Company (OMC) in Anantapur encroach upon forests and other mines. Money thus made was allegedly—and circuitously—routed back to some companies owned by Jagan. In all, there are three cases highlighted by the CBI that establish beyond reasonable doubt that the Reddy brothers and Jagan were as thick as thieves.

That the two Reddy families were business partners became more than apparent back in 2007-08, when Brahmani Steel Industries was inaugurated in the backward Kadapa district of Andhra Pradesh. Jagan had a stake in this steel plant to be set up by Janardhan Reddy on a 10,760 acre plot of land granted by the YSR administration for the purpose. The government land had been allotted at Rs 18,500 per acre, which the Reddy brothers promptly mortgaged to raise Rs 350 crore from financial institutions. They then got each of their shell companies, GJR International Holdings Ltd and GJR Holdings (Mauritius), to buy 48.9 million shares of Brahmani Steel for Rs 49 crore. Both Jagan and the Reddys then sold their shares to the Jindals, and exited the business, presumably with enough to laugh their way to the bank (or next project).

It’s a maze of interlinked interests, and OMC’s then managing director, Srinivasulu Reddy, Janardhan’s brother-in-law, has also been arrested. Incidentally, Ramachandra Reddy, joint managing director of Brahmani Industries, was a Congress legislator from Rayadurg in Anantapur and close follower of YSR.

A third aspect under investigation, for which Janardhan has been picked up, is what is being referred to as the ‘quid pro quo’ route of money laundering from Reddys’ companies to Jagan’s enterprises. According to the details unearthed so far, a company called Red Gold ‘bought’ 50 per cent of all the iron ore mined by OMC at base prices. Red Gold, in turn, sold the ore at market prices and invested the proceeds in a company called RR Global Enterprises. Both companies belong to the Sajjala brothers—Ramakrishna Reddy and Diwakar Reddy, who are currently being questioned.

Investigations reveal that Red Gold passed on Rs 90 crore earned from iron ore sales to Sajjala Iron and Steels Pvt Ltd, which morphed into RR Global Enterprises and invested Rs 44 crore in Jagati Publications and Rs 30 crore in Indira Television—both owned by Jagan. Once these investments were made, Red Gold, Sajjala Iron and Steels and RR Global became defunct, while the brothers continued as directors on the boards of Jagan’s companies.

CBI sources say such re-routing of money attracts a host of criminal offences for which punishments range between 17 and 23 years’ imprisonment. It is also interesting that Janardhan, who is the brothers’ spokesperson, has consistently held the senior BJP leader Sushma Swaraj as their ‘thaayi’ (mother) and YSR as their ‘father’. With a parent each in two national parties, one would expect their power to reach deep. And it literally did.

If the CBI action has had a blowback, it was in the form of a Bellary bandh called by supporters of the Reddy brothers, an event during which small gangs of thugs attacked government offices in protest. With more cases expected to be filed against them in Karnataka, their supporters in Bellary should perhaps get used to their leaders being in and out of jail. “Even the Lord can’t help them,” says Shyam Prasad, a miner from Anantapur who was duped by the brothers and is now in search of legal redress.

In a way, Prasad may be right, as Tirupati town witnessed widespread protests demanding that the government seize two bejewelled crowns donated by the Reddys. One is a Rs 45 crore diamond studded crown donated to Lord Balaji in Tirumala, and the other, a smaller one donated to the Sri Kalahasthi temple. 

Those who have visited Janardhan Reddy’s Bellary home speak of a similar diamond studded crown on display. It is set in a revolving glass case lit from within, and rests on a custom-made sandalwood stand. While the CBI did not seize it during its raid, it did find 30 kg of gold, Rs 1 crore in cash, and land documents that could come in use for further investigations.

“Janardhan Reddy is nothing but a blue-collar criminal who used his official position to threaten, coerce and extract favours from traditional mining families,” scoffs one such mining magnate who complains the Reddys have given mining a bad name, a business run in the region by about half-a-dozen families for generations.

Meanwhile, the BJP government in Bangalore is under pressure to take action against the Reddys, in accordance with the Lokayukta’s mining report. It has to take action within two months, otherwise the report would be deemed to have not been accepted by it. 

Currently, a committee of four additional chief secretaries is going through the report for action recommended (as has been against the Reddy brothers, their crony B Sriramulu, three former CMs, other politicians, and about 787 government employees). 

Two former CMs, Yeddyurappa and Kumaraswamy, are already in the dock, with the state Governor having sanctioned their prosecution. In Andhra Pradesh, Jagan has more trouble coming his way with the Enforcement Directorate waiting to lodge cases of money laundering, while the Income Tax Department tries to ascertain his real income. How many more politicians this scam claims, one cannot hazard a bet yet.

Andhra PradeshJagan ReddyJanardhan Reddy