Mining mafia 'subverted' the State, says I-T dept note

The note, accessed by Deccan Herald through sources in the Central government, also provides an overview of the investigation currently underway on the Bellary mining companies. The I-T department conducted three massive raids on the Bellary mining companies between October 2010 and February 2011. The raids yielded thousands of pages of crucial information, which, for the first time, give a complete view of the scale and nature of illegal mining in the district.

The unearthed evidence, shared with the CBI and the Lokayukta, constitute the mainstay of the yet-to-be-released U V Singh report, which details with how one ‘GJR Sir’ facilitated an elaborate system of illegal mining by collecting ‘risk money’ and paying kickbacks to government officials and private individuals in various locations. Deccan Herald had accessed the U V Singh report last week and published details of these illicit payments.
A senior Central government official, who has reviewed the evidence unearthed in these raids, described it as a nail in the coffin of the mining mafia. “The unprecedented spread, depth and quality of data has drawn the battle line…There is enough ammunition to support a multi-pronged probe by different agencies to subdue the illegal miners and their accomplices,” he said. 

“The quality of evidence unearthed as a result of search operations is unparalleled,” says the I-T note. “…The other five or six agencies investigating the cases do not have even a fraction of the evidence we have,” it adds. 

The I-T department has reportedly taken several unusual measures to protect the evidence, given its “explosive nature” and the “notoriety of affected parties”. Several senior officers of the Investigation Wing have made copies of the voluminous documents and kept them in their custody.

The broad swathe of documented violations reportedly makes the evidence explosive. Commenting on the nature of recorded transgressions in the district, the Central government officer said: “Income tax evasion is a small charge here. The fraudulent miners should be prosecuted for treason to bring down the State.”

A top I-T official initially declined to comment on the note saying it was too sensitive and no public interest would be served by publishing it.

However, after considering the details Deccan Herald possessed, he confirmed that the information was authentic. Defending the use of the word “subversion” he said a parallel state machinery with own rules, taxation system and enforcement machinery had come emerged in the mining districts.

“You have an entire class of unregistered traders dealing illegally, privately issued permits with swastik marks to let them clear checkposts, a well-accounted system of collecting risk money, 20 to 25 motorcycle gangs keeping 24/7 watch to enforce illegal permits…All they lacked was a constitution of their own,” he said.

”The impunity with which they have run this parallel government for such a long time without any challenge shows that Karnataka has entered a danger zone. The system is similar to what we have seen in Dhanbad under the coal mafia. This will have devastating consequences for the rest of the state,” he added.

The three raids led to the detection of unaccounted income of Rs 1,829 crore. By a strange coincidence, this was exactly the amount of additional resources that former chief minister B S Yeddyurappa tried to raise by levying fresh taxes in the 2010-11 budget. 

The IT note also summarises the evidence on different dimensions of illegal mining – encroachment, hafta, over-extraction, use of dead mines to route illegal ore, creation of shell companies to mask sellers and flow of funds, benami bank accounts and so on. 
Giving the background of the raids, the IT note observes that the “transition of certain mine owners” to politics brought about a “paradigm shift” in illegal mining. A new modus operandi, “risk movement” -- transportation of illegal ore without valid permits – emerged in 2008.

The magnitude of the “risk movement” and the vandalisation of Bellary’s mineral resources reached alarming proportion prompting the IT department to make a direct intervention to “overturn the subversion of the state”, it notes.