Hyderabad:
Janardhana Reddy, the Tourism Minister of Karnataka till as recently as last month, has been arrested for illegal mining.
A CBI team raided Mr Reddy's home this morning in Bellary, on the border between Karnataka and Andhra Pradesh, an area that has given his two brothers and him incredible clout in the political landscape of both states. Janardhana, Somasekhara and Karunakara Reddy have built their fortune through mining, most of it illegal, according to a series of cases against them.
The CBI reportedly found Rs 3 crore in cash and 30 kilos of gold from the former minister's palatial mansion.
He has been remanded to 14-day judicial custody.
His brother-in-law, Srinivas Reddy, who is the managing director of one of the mining companies owned by the Reddy family, has also been arrested after his home in Bangalore was raided.
Both Srinivas and Janardhana are now at the CBI headquarters in Hyderabad.
The Reddy family officially owns a group of mining companies that operate in Andhra Pradesh. Of these, the most controversial has been the Obalapuram Mining Company (OMC), which lists Janardhana as a Director and Srinivas as Managing Director. While the company operates in Andhra Pradesh, it is headquartered in Bellary about 300 km from Bangalore.
OMC has shown the sort of growth curve that would have most entrepreneurs salivating. It was set up in 2001 by Gali Janardhana, when 34 years old, with an initial capital of Rs 10 lakh. By 2003-2004, OMC had taken over several mining leases directly or indirectly and had reported a turnover of Rs 35 crore. In just five years, by March 2009, the turnover was Rs 3,000 crore.
The Reddys' political graph followed a similar path. In 1999, when senior BJP leader Sushma Swaraj contested the Lok Sabha election from Bellary, the Reddys were widely acknowledged as powering her campaign. She lost the election, but the Reddys had acquired a new prominence. By 2008, Karunakara became the Revenue Minister; Janardhana had the Tourism portfolio.
Trouble in this case began for the Reddy brothers soon after former Andhra Pradesh Chief Minister YSR Reddy's death in a helicopter crash two years ago. A committee set up by the Supreme Court to examine illegal mining in Andhra Pradesh reported gross violations. It also said a mining lease to OMC extended from 2004 till 2017 by the YSR government was illegal. There were allegations that OMC and other companies were mining in protected forest areas, and that the footprint of the mines actually crossed into Karnataka.
In December 2009, K Rosaiah who took over as Chief Minister after YSR died, suspended OMC's operations and asked for a CBI inquiry. The Reddy brothers tried to challenge that but failed.
The Lokayukta or ombudsman of Karnataka, Justice Santosh Hegde, who retired last month, said in different reports that the Reddys misused their powers as ministers to protect their own mining interests, and to coerce other mining companies into serving as fronts for them. The Reddys allegedly provided safe passage to trucks carrying illegal amounts of iron-ore for export from mines to ports nearby.
As the BJP defended them, the evidence against the Reddys kept piling up Last month, Justice Hegde's report on illegal mining indicted both BS Yeddyurappa and the Reddy brothers. While Mr Yeddyurappa was forced to quit as Karnataka Chief Minister, the Reddys, despite shrill lobbying, were not inducted into the new Cabinet formed by Sadanana Gowda, who now heads the government.
The BJP has tried to play down today's arrest as part of routine investigation. "It has been in public knowledge for a long time that Janardhana Reddy has been carrying on mining activity. He has been making claim that he's not done anything illegal... I don't see anything special in this. It's natural course of investigation. I am sure Mr Reddy will come out clean after proving to authorities that he is innocent and he has not violated any rules," senior BJP leader Dhananjay Kumar said.
The Congress was quick to retort, "Unfortunate that BJP spokesperson saying so. If you look at Bellary, it's obvious that national wealth has been looted... The Lokayukta said it is no lesser than the 2G scam." The party's BK Hariprasad also tore into Dhananjay Kumar for saying that the Reddy's had played an important part in developing the BJP at the grass roots in Karnataka and that the party "has benefitted by their political activity."
Mr Hariprasad said, "Stern action should be taken. The spokesperson of BJP says he has developed BJP in Karnataka. The whole deal is taking place under the BJP high command. The high command has benefitted from this."