Chinese thirst for iron ore enriched Janardhana Reddy

A charted accountant firm here engaged by the Central Bureau Of Investigation (CBI) to look into the voluminous documents pertaining to commercial activities of Obulapuram Mining Company Limited (OMCPL), the accused No.4 in the illegal mining case involving Gali Janardhan Reddy, has put the total revenue through illegal mining at Rs 4,310 crore and the tax payable to the exchequer amounts to Rs 521 crore for a period of three years (2007-2010).

The CBI, in its charge sheet, claimed that between 2007 and 2010, the OMCPL had earned Rs 4,310 crore as revenues by way of local sales and exports through illegal mining. However, the OMC earnings, which stood at Rs 2,316 crore in 2007-08 dropped to Rs 1,522 crore in 2008-09 and then to about Rs 1,046 crore during 2009-10. Similarly, the profits also dwindled from Rs 765 crore to Rs 484 crore in 2008-09 and then to Rs 189 crore in 2009-10.

The firm’s analysis attributed this to the drop in the price of iron ore from Rs 3,968 per tonne during 2007-08 to Rs 1,758 after 2008. The OMCPL earned Rs 2,316 crore during 2007-08 due to heavy demand for iron ore in China in view of Beijing Olympics, but the prices dropped later.

The charge sheet reveals that the OMCPL in contravention to the covenants of the Mining Act, committed a criminal breach of trust by keeping false records and files showing false mining in the mining lease area of 68.50 hectares.

“The firm obtained permits by misrepresentation to the ADMG and, furth­er dishonestly and fra­u­d­ulently used those permits to justify the illegal mining carried out by them in Karnataka and surrounding areas; thereby, committed criminal breach of trust,” the CBI observed.

On behalf of the OMCPL, Gali and his brother-in-law submitted false returns showing excavation of iron ore in the lease area without having knowledge that the information furnished to the government authorities weren’t genuine.

The CBI, in its charge sheet, maintained that the evidence available on record prove that the mining leases were used fraudulently as a camouflage for the illegal mining activities.

Three mining companies—Bellary Iron Ore Private Limited, Obulapuram Mining Com­pany and Y Mahabaleswarappa and Sons—obtained exemption from the state government from obtaining forest licence for the transport of extracted iron ore.

As per law, mining firms should procure permits both from the mining and geology department and the forest department for the transportation of the ore.  Surprisingly, in this case, the forest department failed to check illegal mining as the companies didn’t obtain any permit from it but transported the ore only with the permits issued by late Linga Reddy, the then assistant director of mines, Anantapur.