This Article is From Jul 29, 2011

Illegal mining was 'single window for corruption'

Bangalore: The report on illegal mining in Karnataka has ended the term of Chief Minister B S Yeddyurappa.  He will officially resign on July 31. Like other politicians, Mr Yeddyurappa has been accused of colluding with mining firms who paid kickbacks to those in power in return for mining leases.

The report has been prepared by Santosh Hegde, Karnataka's Lokayutka or ombudsman; he estimates that illegal mining has cost the government 16,000 crores over the last few years.  Mr Hegde says illegal mining functioned in Karnataka as "a single window for corruption."

Mr Hedge lists several companies for conducting illegal mining in the state. Among them Adani Enterprises, Shree Mallikarjun Shipping, Salgaonkar Mining Industries and Raj Mahal Silks.  

They've been accused of illegally exporting huge amounts of iron-ore, and forging permits that allowed their iron-ore to be transported from mines to ports. JSW Ltd has been accused of costing the government 324 crores through similar malpractices.

Gujarat-based Adani Enterprises, headquartered in Gujarat, has been accused of paying "for political favours" to ensure that its illegal exports of iron-ore were not interrupted.

Obalumpuram Mining - owned by the Reddy brothers who are ministers - has been accused of using front companies to control more mines than legally allowed. The Reddys have also been faulted for under-invoicing their iron ore exports to Singapore and parking their money  in tax havens like the  British Virgin Islands and the Isle of Man.

What led to Mr Yeddyurappa's exit from office was a ten-crore donation made by a mining company to a trust run by his family in his home district of Shimoga. 

Mr Hegde said the same firm- which was not financially stable - borrowed money from other companies to make the donation. The mining firm also paid 20 crores for a one-acre plot of land that was worth 1.25 crores.  The land was sold by Mr Yeddyurappa's children.  Mr Hegde and his team of investigators believe this company -South West Mining -is closely linked to the massive Jindal Steel Empire.  "These are sham transactions," Mr Hegde writes in his report.  "These transactions amount to receiving illegal gratification to show an official favour."