I-T raids on TN minister: Gutka scam and links with Reddy, not political vendetta, say officials

Did the I-T raid on TN health minister have to do with the Gutka scam and links with Sekhar Reddy
news I-T Raids Tuesday, April 11, 2017 - 19:37

In December 2016, then Chennai City Police Commissioner S George grabbed headlines for a rare occurrence in the Indian Police Service: he had written to the Chief Secretary of the Tamil Nadu government seeking an investigation into corruption charges against members of his own brethren. This is said to have sent several police officers, who were purportedly named in the letter, scurrying for cover. But what the letter also did was also divert attention from the bigger allegations surrounding the ‘Gutka’ scam: the involvement of senior ministers of the Jayalalithaa-led AIADMK government.

The case pertains to a raid conducted by Income Tax sleuths on July 8, 2016, at the godown, offices and residences of a pan masala and gutka manufacturer in Tamil Nadu, who was facing charges of evading tax to the tune of Rs 250 crore.

Seized during the raid was a diary containing names of those who were believed to have been paid off by the gutka manufacturers– and one among them, a top source in the I-T department has now told The News Minute – was state health minister Dr C Vijayabaskar.

“Since he was the health minister, they had to keep him in good books," reveals the I-T official. "While the exact amount he received on a yearly basis is not certain, it can be said with confidence that he was being paid for his cooperation for this unlawful activity," the official added.

The ‘fact’ that Dr Vijayabaskar was allegedly named in the diary has now gained importance, because in the wee hours of April 7, 2017, the health minister was among several other high profile persons raided by the I-T department. And with political tempers running high ahead of RK Nagar polls, the department was blamed of political vendetta. The I-T department says they have no political motivations.

The source from the I-T department says that the raids on the health minister have nothing to do with the RK Nagar polls, but his alleged involvement in the Gutka scam and links with a mining baron.

The Gutka Scam

In 2013, Tamil Nadu Chief Minister J Jayalalithaa had announced a ban on the manufacture, storage and sale of the carcinogenic chewable forms of tobacco, including gutka and pan masala. The ban relied on the Food Safety and Standards Act, which has provisions to prevent tobacco and nicotine from being used as ingredients in any food product. Despite this ban, however, 400 kg of gutka and pan masala was recovered by the Food Safety Department in Chennai last year.

"Clearly manufacturers knew they were going against existing rules under the Food Safety Act and the only way to get away with it, was to ensure the health minister did not interfere," says the IT official. "We did not reveal then that his name was also on the list because we wanted to study the case and his involvement carefully before taking any action. You can't touch a sitting minister without solid evidence," he adds.

Sekhar Reddy linked to Dr Vijayabaskar?

Following this, late last year, I-T sleuths reportedly discovered that Vijayabaskar had allegedly another source of income, in the form of mining baron, Sekhar Reddy.

On December 11, raids were conducted in the premises belonging to industrialist Sekhar Reddy, his associate Srinivasa Reddy and their agents, including a person called Prem Kumar. According to reports, over 100 I-T officials were involved in the raids which happened in nine locations in Chennai and Vellore. In the total seizure in this raid, Rs 96 crore was reportedly in demonetised currency, while Rs10 crore was in the form of newly introduced Rs 2000 notes.

"In investigations that followed this raid, we found that Sekhar Reddy was paying a share to Vijayabaskar. The money paid would have run into tens of crores if not hundreds," claims the I-T official.

The officer, however, refused to hand over any proof of Dr. Vijayabaskar’s involvement in the Gutka scam or with Reddy to The News Minute.

"While the report for the Gutka case has been submitted to the assessing officer, investigation in the second case was still underway. That is when reports of bribe being given in the RK Nagar elections emerged," says the official.

RK Nagar bribery – final strike

Following the announcement of candidates for various parties, the Election Commission had roped in the Income Tax department to monitor the poll. The constant vigilance being maintained by the I-T department supposedly revealed that Vijayabaskar and Municipal Administration and Rural Development Minister SP Velumani were allegedly involved in cash distribution.

"With prior evidence of tax evasion existing against Vijayabaskar, this seemed the opportune moment to strike," says the official, dismissing allegations of political pressure from the Centre. "We realised that he is bound to have black money stashed in his residence or that he would have entrusted it with assistants or relatives. The raid was being planned for close to two months," he claims. AIADMK Amma's TTV Dhinakaran and others in his faction have however accused the centre of using the Income Tax department.

Rs 5 crore has been recovered from Vijayabaskar's assistant while Rs 20 lakh was seized from his Pudukottai property, according to I-T officials. "The Rs 89 crore specified in the document that is now in public domain, was already spent by the listed leaders by April 4. We were planning to conduct raids closer to the election but when we heard that the money, which we are estimating to be over Rs100 crore was almost spent, we swung into action," the I-T official explains. 

Dr Vijayabaskar could not be reached for a comment. 

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