Upalokayukta for probe Davangere Bhadra Sugars scam

Upalokayukta has recommended a criminal investigation into the auction sale of Bhadra Co-operative Sugar Factory in Davangere.

The enquiry held by the Upalokayukta Justice Subhash B Adi also recommended to cancel the auction sale of the factory, worth Rs 150 crore, including 188.58 acres of land and machinery. The complaint before the Upalokayukta stated that the sale officer and recovery officer representing the cooperative bank, which had lent loan to the factory, closed the auction sale on January 27, 2017 in favour of Davanagere Zilla Kabbu Belegarara Raithara Sangha for a paltry

Rs 54 crore. Upalokayukta had directed deputy commissioner and SP (Lokayukta) Davangere to hold a joint enquiry into the auction sale.

The factory is situated at Doddabathi, around five kms from Davangere town. The auction sale process was taken up without informing the Karnataka Industrial Areas Development Board (KIADB), despite the latter raising objections. The base price for the auction was set at Rs 150 crore. The enquiry revealed that Davangere Zilla Kabbu Belegarara Raithara Sangha (society) was formed just 17 days prior to the auction sale and it did not have money to pay the initial amount to take part in the auction. The report disclosed that the society obtained a loan of Rs 8 crore from Davangere South MLA and former minister Shamanur Shivashankarappa.

The enquiry report also stated that the president of the society claimed the loan obtained from the MLA was repaid after collecting membership fee from 1,127 members. However, documents showed that only Rs 2.73 crore was collected by way of membership fee. The president did not provide documents to explain the repayment of remaining amount to the MLA.

"The documents indicate that formation of Davanagere Zilla Kabbu Belegarara Raithara Sangha was an afterthought by some persons with an intention to make unlawful gain by participating in the auction sale. It shows how the recovery officers were hand in glove with the Davangere Zilla Kabbu Belegarara Raithara Sangha. If there were no bidders for the reserved amount, the auction should have been postponed. The entire act shows that officials were involved in malpractice with an intention to favour the persons engaged in money laundering,'' Justice Adi said. Upalokayukta has sent a report under Section 12 (1) of the Lokayukta Act recommending the government to cancel the auction sale, to initiate criminal investigation and disciplinary action against the erring officials.