Press Esc to close
Thursday 31 July 2014
News updated at 2:43 AM IST
Weather
Max: 28.4°C
Min : 20°C
In Bangalore
Generally cloudy

Reddy firm broke many laws

Bangalore, Jul 28 (DHNS)

Illegal money transfers and under-invoicing detected

Benami transactions, under-invoicing and tax evasion are among the findings by the Lokayukta against the Reddy brothers.

The State-appointed ombudsman has recommended the removal of three Ministers - G Janardhana Reddy, G Karunakar Reddy, and B Sriramulu - from the Cabinet as they were on the board of Obulapuram Mining Company(OMC) that was guilty of several illegalities.

The company is accused of exporting iron ore at far below market rates to a Singapore-based firm, GLA Trading. Officers of the Income Tax department discovered that Janardhan Reddy was a Director of GLA at the time. (GLA is said to refer to Gali Laxmi Aruna, wife of G Janardhana Reddy).


In the years 2007-08 and 2008-09, OMC exported 8.5 lakh MT of iron ore to GLA Trading International Limited, Dubai. According to records obtained from Kakinada, Krishnapatnam, and Vishakapatnam ports, OMC was found to have exported ore originating from Karnataka. This busts the Reddys claim that they have not been involved in mining in Karnataka.

According to the I/T department, the total under invoicing has been pegged at 52 million US dollars, or Rs 215 crore. "It should be noted that this under-invoicing has caused loss to the Government from export made to GLA by OMC for two years," says the report.
It also notes that the Union Government had lost foreign exchange due to it, and observes that the money may be parked in tax havens.

This conclusion has been arrived at as GLA Trading has a dubious history.

The company, earlier Man-Go Pub Pvt Ltd, was a company registered in Singapore. One share of this company was transferred in favour of GJR Holdings with its address at Isle of Man. "Again it should be noted that the letter GJR in this company refers to Gali Janardhana Reddy and the company is registered in Isle of Man, which is (an) internationally known 'tax heaven'," the report notes.

The share was then transferred to another firm Interlink Services Group Limited in British Virgin Islands in June 2009, another tax haven. The Lokayukta also notes that after it began investigation into the illegal exports, Janardhan Reddy ceased to be a Director of GLA Trading with effect from December 12, 2009.

Dubious transactions


The Lokayukta has also found benami transactions involving Associated Mining Company (AMC) - owned by Janardhan Reddy and his wife Aruna - and Sri Bhakta Markandeshwara Minerals (SBMM).

The Lokayukta has concluded that bank accounts operated by SBMM are benami accounts operated by proxy. Other payments to “G J Reddy Sir” from SBMM have also been found, as payments for risk protection.

Suggestions

* Removal of Janardhana Reddy, Karunakara Reddy, and  Sriramulu from the Cabinet
* Recovery of Rs 215 crore from OMC for under-invoicing
* RBI should take action against OMC for parking money abroad
* Recovery of illegal payments to “GJ Reddy sir” and AMC
* Filing of cases for benami transactions.

Go to Top

Photo Gallery
Villagers console each other as they watch a rescue operation at the site of a landslide in Malin...

Villagers console each other as they watch a rescue operation at the site of a landslide in Malin...

Barack Obama smiles as he talks about the economy at the Uptown Theater in Kansas City...

Barack Obama smiles as he talks about the economy at the Uptown Theater in Kansas City...

Rescue workers clear the debris at the site of a landslide in Malin village...

Rescue workers clear the debris at the site of a landslide in Malin village...

Palestinian man reacts next to the body of his relative...

Palestinian man reacts next to the body of his relative...

Palestinian boy comforts his father, whom medics said was wounded by Israeli shelling in Shejaia...

Palestinian boy comforts his father, whom medics said was wounded by Israeli shelling in Shejaia...

England's Whitlock competes in men's All-Around Artistic Gymnastics at 2014 Commonwealth Games...

England's Whitlock competes in men's All-Around Artistic Gymnastics at 2014 Commonwealth Games...

England's Stuart Broad celebrates with his teammates after running out India's Murali Vijay...

England's Stuart Broad celebrates with his teammates after running out India's Murali Vijay...

The debris of a hillock after a landslide triggered by heavy rains at Malin village in Pune ...

The debris of a hillock after a landslide triggered by heavy rains at Malin village in Pune ...

Siddaramaiah at the launch of a drinking water unit in Vidhan Soudha premises in Bengaluru ...

Siddaramaiah at the launch of a drinking water unit in Vidhan Soudha premises in Bengaluru ...

Over forty houses were buried in a landslide triggered by heavy rains at Malin village in Pune ...

Over forty houses were buried in a landslide triggered by heavy rains at Malin village in Pune ...

Copyright 2014, The Printers (Mysore) Private Ltd., 75, M.G Road, Post Box 5331, Bangalore - 560001
Tel: +91 (80) 25880000 Fax No. +91 (80) 25880523