While the CBI is quietly closing some of the cases related to the Belekeri port illegal iron ore scam, the Karnataka Lokayukta Special Investigation Team (SIT) probing Janardhana Reddy and his associates arrested one of the partners of the mining baron’s firm Obalapuram Mining Company, on Wednesday. The team arrested BV Srinivasa Reddy, Janardhana Reddy’s partner, a mine operator and also the man behind setting up shell companies to mine iron ore illegally in Ballari, Chirtadurga and Tumakuru.
In 2015, the Lokayukta SIT had filed a case against Gali Janardhana Reddy, KM Ali Khan, BV Srinivasa Reddy and others for conspiring against one N Shaik Sab in Sandur taluk of Ballari district. They were arrested for, allegedly, illegally mining in the mines owned by Shaik Sab's Indian Mines and Minerals Pvt Ltd, and thereby extracting huge quantities of iron.
SIT Inspector General of Police (IGP) M Chandrashekar said that Srinivasa Reddy and others had coerced Sheik Sab to divest 75% of the shares in his private mining company and that he had illegally extracted over 1.5 lakh metric tonnes of iron ore between July and December 2009.
According to a source in the SIT, Srinivasa Reddy was the man who allegedly forced mine-owners to enter into partnerships with several front companies established by Gali Janadhana Reddy’s associates in order to extract iron ore illegally.
The modus operandi
Srinivasa Reddy, a partner in Janardhana Reddy’s Obalapuram Mining Company, established two shell companies - Sri Minerals and Basaveshwara Minerals. According to the partnership agreements of Sri Minerals and Basaveshwara Minerals, Srinivasa Reddy is named as the managing partner.
Srinivasa Reddy was tasked with identifying mining leases that are involved in land disputes and that did not have the required permits to operate.
He would later enter into agreements with the mine owners and would force them to sell the iron ore for low rates. “Sri Minerals entered into agreements with several such companies. Upon inspection of the agreements, it became clear that Srinivasa Reddy’s shell companies were essentially given all the power to run the extraction of iron ore and illegally transport it. The iron ore was purchased at Rs 250 per metric ton, which was markedly low compared to the market price in 2009,” the SIT source said.
Srinivasa has also been accused of hiring contractors who would carry out extraction of iron ore in these mining leases, organise transportation for the illicit operations. These contractors also involved middlemen who would trade in illegal iron ore and facilitate the flow of money in a circuitous route to Janardhana Reddy and his aides.
“In the case of Indian Mines and Minerals, Srinivasa Reddy is said to have hired Mahfouz Ali Khan, a former employee of Janardhana Reddy’s Brahmani Steels, as a fresh partner in the firm. The agreement ensured that the existing partners retired, thereby taking control of the mine,” the SIT added.