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From Tehelka Magazine, Vol 7, Issue 13, Dated April 03, 2010

‘Mining Lease Is Used As James Bond’s Gun’

Santosh Hegde, 70, Lokayukta of Karnataka, probably has the most vexing job in the state, pointing out wrongdoings and hoping they’ll be corrected. His report on illegal mining in the state was the most damning in recent times on the subject. A second part of the report is due in a few weeks. In this interview with VIJAY SIMHA, Hegde, who was a judge of the Supreme Court for six years, lays bare the outrageous loot of state resources by a few and how it is devastating a people. Excerpts:

NO EASY OUT Hegde says there is no point in nationalising mining

“Mining lease is being used as James Bond’s gun, to kill anybody anytime anywhere”
Santosh Hegde, 70, has probably the most vexing job in Karnataka as the Lokayukta. This means he acts as the conscience of the state, pointing out the wrongdoings and shortcomings. His report on illegal mining in Bellary, Tumkur, and Chitradurga in Karnataka was the most damning in recent times on the subject. A second part, the last, is due in a few weeks. In a long career, Hegde has also been a Supreme Court judge for six years. In this exhaustive interview with Vijay Simha, Hegde lays bare the outrageous loot of state resources by a few and how it is crushing an entire people.

Have things always been so bad in Bellary?
It all started from 2002. Mining in Karnataka has existed for a long time and a few families were involved in this business. Prominent among them were the royal family of Sandur, people still address them as Raja of Sandur, whose territory was full of manganese and iron ore. But, the international market was falling and in the domestic market, the buyer decided the prices. So, they were not truly getting value for their effort. Consequently, they also started slowly closing down.

From 2002, China wanted plenty of iron ore for the Beijing Olympics, which were held in August 2008. Some people who had the foresight to imagine what was in it, managed to get into it though their previous instances were flops and they did not have the capital to start a mine. Obalapuram area had very rich iron ore and iron ore mines. That was understood by a particular family and they slowly started acquiring mining leases. But, they didn’t get anything in Karnataka because other third parties controlled them already though they were not doing a big job of mineral excavation.

This particular family developed a nexus with a former chief minister of Andhra Pradesh and they got mining leases in contiguous portions of the Andhra area for the Obalapuram Mining Company (OMC). From day one, they had their contacts abroad and they started doing their mining legitimately in the Andhra side at that point of time. When the market went up, mining companies run by families like the Baldotas, the Modis and others in Karnataka also woke up.

It would appear that there is something particularly nasty about mining in Bellary. How did the loot begin?
Around 2005 and2006, the competition became so intense that there were conflicts between the two groups. Political pressure was used. Lot of money flowed into politics, no doubt. Bellary grew and the Obalapuram family had by then entered into politics. They joined the Bharatiya Janata Party (BJP), which had no foothold at all at that point there. They supported Sushma Swaraj in the election against Sonia Gandhi. Swaraj did creditably well though she didn’t win. With that political support, especially the Andhra Congress government, they managed to continue. It was lucrative and everybody, in Karnataka and in the Andhra side of Obalapuram, became very active in mining. When lot of money starts coming, then you try to find out the quickest way, most probably illegal means, by which you can earn more than the others. They started doing illegal mining.

But, mining is a tightly regulated activity.
The Indian Bureau of Mines controls mining. You can excavate only so much from a particular mine head. You cannot go beyond six metres in depth. There should be distances between each mine head, otherwise they collapse if they are too close and cause tragedies. There are areas that are prone to landslides. You are not supposed to mine there. Sometime ago, the Supreme Court had taken the view that no non-forest activity must take place in a forest area. They had appointed a Centrally Empowered Committee (CEC), whose permission was needed if you had to do anything that did not degrade the forest area. All these restrictions are there. So, they found it a bit difficult to follow the law and do what they want to do.

Government officials are believed to be the weakest link here, undoing all efforts to right things. How true is this?
They started doing other illegal things because the CEC did not have local people supervising, neither here nor in Andhra Pradesh. The easiest people who can be bought are those who are in government service. The officers were from the mines and minerals department, the forests department, the transport department, the police department. Obviously, they were all available for a price. The price was a pittance compared to the earnings.

What was the setting when you entered the scene as Lokayukta in 2006?
A controversy had arisen between a former chief minister of Karnataka (HD Kumaraswamy) and the Reddy brothers. The Reddy brothers were then actively in BJP politics and made an allegation saying that the chief minister had taken Rs 150 crore for showing official favour. They said they had the evidence but they would not give it to a government official. The chief minister gave the inquiry to a former chief justice of the Madhya Pradesh High Court. The judge sought the help of the CBI. At that point, for whatever reason, the same government (of Kumaraswamy) withdrew the inquiry. Janardhan Reddy had filed a case in the High Court and made public statements that he will not give the evidence to anyone except the CBI or a commission of inquiry. Maybe the government of the day took advantage of this and said an inquiry is not needed. By the time I came in as Lokayukta, certain issues pertaining to the grant of mining lease, the misuse of the lease, the damage caused to the environment and loss to the state were generally referred to me for inquiry.

What did you find?
In the course of inquiry, I found very many irregularities not confined to that government but to the governments previous as well. In 2002, this mining boom started. There was a mad rush to get a mining lease. The rush was such that people didn’t even know where they were applying for. They would produce a map of Hospet taluk or of Sandur taluk, and give the government the name of a village with some boundaries for grant of lease. This would go to the central government, which was as careless as the state government. There was no cross-checking of facts, no counter-checking, and no sending of a team of surveyors and of the mining department to find out if there was a place of such a description. And, they started granting leases.

You could get a mining lease easier than a hotel room in Bellary at that point.
In Bellary alone, 100 leases were given. About 60-odd leases were granted in neighbouring districts of Chitradurga and Tumkur. When I went with my team to Bellary, we found a huge scale of illegal mining going on. Every Tom, Dick, and Harry, even those who couldn’t afford to buy expensive machinery and were using pickaxes and shovels and this and that, were at it in any bit of open land. It was like a gold rush. You could find illegal mineral storing plots, which is again all controlled by law. No law is followed and in the process, we found huge scale illegal mining.

Yet, there was the curious case of a company that showed losses during the gold rush period.
There is a company called Mysore Minerals Ltd. (MML), which is wholly owned by the state. They had very good quality iron ore available for them to mine, running into thousands of kilometres. But, they were not mining. Even in this mad rush, they were very cool about it. They granted sub-leases to somebody else. Merrily, at their guesthouses in Sandur, Hospet and Bengaluru, these people who got the leases were staying comfortably. This was the only company that ran into a loss between 2002 and 2008, of about Rs 600 to Rs 700 crore. They had given it to third parties for a pittance. I mention this specifically for the benefit of those who say we must set up nationalised mining. That is no answer at all. That is like moving from the devil to the deep sea. Unless the human being is honest, nothing can happen.

What was the scale of what you found? It is believed that a terrible template is being scripted in Bellary for the rest of India.
We found huge areas of forests used for iron ore mining and for dumping the waste. The encroachment was such that no person with the desire to maintain the ecology or the environment would ever get in. So, I prepared a detailed picture of illegal mining, starting from the grant of mining lease to the actual excavation.

Each area of the mining cycle is like a scary free-for-all. Could you detail the various wrongdoings?
Let us begin with the excavation part of it. What is excavated is wholly contrary to the standards laid down by the Indian Bureau of Mines. There is nobody to supervise. Officers of the mines and minerals department were quite happy to stay in office-cum-residences because the share of the loot used to come to them there. They never bothered about it. The mineral excavated has to be transported. Sometime ago, the best quality iron ore, which is called 64 fe, was being given by the state government on a royalty of Rs 27. The same metric tonne of iron ore, taken out on a royalty of Rs 27, was being exported in 2006-2007 at Rs 6,000 to Rs 7,000. Hundreds and hundreds of crores of rupees were lost. I appointed people to look into the account books of companies like MML etc., and they have prepared their reports.

Is all this limited to the Reddy brothers?
It was not confined to the Reddy family. It was there for every person who was mining. The number of leases given out was about 158. But, mining was going at more than 250 to 300 places. Nobody stopped it.

The roads are another nightmare in Bellary. There’s a scam in every truck, apparently.
Sometime ago, nearly 10,000 lorries were leaving everyday from Sandur and Hospet for the Bellikere and Goa ports. A single rear axle vehicle, which has four wheels at the back and two wheels in the front, has loadable capacity of 15MT (metric tonnes). They used to put nearly 25MT. The balance of eight to 10 tonnes is unaccounted for. Nobody ever bothered to check the lorries. They had their regular cuts and they allowed the trucks to go. If it is a double rear axle vehicle, which has 25MT capacity, they would load up to 50MT. So, loss to the state increased with the type of vehicle that was used. Incidentally, there was a big shortage of drivers for so many vehicles. There was so much competition to unload and come back within 24 hours that the driver would drive one way and the cleaner would drive the other way. You can imagine the accidents that happen. And the roads in Karnataka are not in a position to take 10,000 trucks to go and 10,000 trucks to come. It created an utter chaotic situation. The roads were completely wiped out in Hassan, which had the most popular route from Bellary to the port then.

There is a human angle as well, with the dust of the ore getting everywhere into people’s homes and bodies.
The iron ore was being carried in open body vehicles. The dust used to fly and en route you would find all water bodies, plants, and houses, everything turned red. When I visited Sandur town, a delegation of 50-60 people including doctors came to me and said, sir, you give us poison and kill us. Don’t kill us like this. Can our children cross the road? Every second, there is a lorry either going or coming. In Sandur, a single gust of wind would bring the entire dust to the town. This is the human problem. Nobody cared. No one could raise their voice.

This is an astonishing catalogue of calamity.
There is looting of mineral, there is an environmental problem, there is a human problem, and there is damage to the roads. Loss to the state is another aspect of the problem. So I prepared a report. I indicted many officers for having given leases without authority, checking and control. Leases are given on revenue land. The same lease is being used as James Bond’s gun to kill anybody anytime and anywhere. So you use the lease anywhere in the district. Not only is mining done in the forest area, it is also dumped in the forest area. Trees are cut to make roads to carry these vehicles. You can imagine the scenario. So much so that after I went there and spoke to people, they started burning these vehicles because they were not getting anything. But, they are bought over by saying I will give you a lakh or two lakh rupees for the development of the village.

What is the state of youngsters? You suggest they are coopted into this system.
In Hospet and Sandur, students in the age of 15 to 25 don’t go to school or college anymore. They are given a motorcycle and a cell phone. They loiter around and look for strange faces and strange vehicles. When they see someone come along, they inform the mine head. All activity will be stopped. I was in the district for three days. Not a single lorry moved out or in. They were all parked. Many residents asked me to settle down there so that their problems are solved. If I were to do that, I would have been shunted out to Timbuktoo by the powers that be.

Is the response of the government less than what it ought to be?
We constantly released information to see if it could activate the government into doing something. It never worked. You can understand from this that the mining group has become very very powerful. One of our very efficient officers, Dr UV Singh, found in the Obalapuram border area that there was trespass from the Andhra side into Karnataka and that a large area of Karnataka was being mined on lease given by the Andhra authorities. There was a temple at the border that was blasted out. I recommended that the Centre get a joint survey done to preserve the border integrity of Karnataka. They never pursued it. You know the modus operandi. You complain, a commission of inquiry is appointed. You ask them to do something, a letter goes and nobody follows it up. Even today, nothing has been done. When two companies fight over boundaries, the Reddys and the Modis, the Supreme Court asks that their boundaries be preserved. When the state asks for it, nothing has been done.

Are system loopholes also making it more difficult?
 There is evidence to show empty lorries coming into Karnataka, filling up material, going back to Andhra, getting an Andhra permit as if the minerals are mined there, and transporting it via Karnataka to various ports. I said check posts must be put up and every empty vehicle’s number must be noted and described as empty. If it returns loaded, we must seize the vehicle. Because public pressure began to build at that point, and there was an aversion towards this Reddy family which was nothing before 2002, the mines department became very active. So what do they do?  If there are violations of the Mines and Minerals Act, you can seize the goods and the vehicle. But, at the same time there is something called a compound offence that can be collected from a miner. You collect Rs 1,000 for material that is worth Rs 1 lakh to Rs 1.5 lakh and let the vehicle go.

I said it amounted to theft and theft is not compoundable. We seized the vehicles. Then, the High Court asked how long you want to keep the vehicle. We released it. They will come back with another number plate. Everybody should realise the impact of the huge scam that is going on in the country. The available extent of iron ore in Karnataka would last for 25 to 30 years if mined according to IBM regulations. Today, with modern equipment, you can remove the entire ore in five or six years, leave the whole thing barren and flee. It is like rape, reap, and run. What are we leaving for our progeny? Will they not require this iron ore?

How can an entire state become paralysed and do nothing?
It is because the mining family have become so powerful politically today. They are capable of manipulating the government. You remember the controversy over who will be the chief minister of Karnataka some months ago. Finally, a deal was struck from Delhi. My understanding is that they have given Bellary to them (the Reddy family). Officers who were transferred outside were re-transferred back to Bellary. I will give you an instance of a District Forest Officer. That officer was there for a year before he was transferred. Nearly Rs 200 crore had to be collected as forest development charge. He collected only Rs 2 crore in 10 months. In 10 days, another officer collected Rs 18 crore. This man was transferred immediately.

What is happening now?
Nothing is happening, except that the royalty to the state government has been increased from Rs 27 a tonne to Rs 200.

Is there no way to stop this? Do we need to pay the officers more?
There is no need to increase the pay of a Karnataka officer because his pay has been trebled since 2008. They have got used to the bribes. If the government wants to do something, we can prevent all this. Export of iron ore should be banned. Why send a commodity that is not regenerable in this country to another country, for whatever price? If you stop export and encourage people to have mills as close to the mine as possible, the central government will get thousands of crores a day as central excise. State governments will get hundreds of crores by way of VAT. It gives employment to people whose land has been used for mining. One factory will do for the whole of Bellary. It will employ 40,000 to 50,000 people. Tell me one good reason why you want to export when it is not worth it economically, ecologically, and environmentally, and when it is not people-friendly.

Have you ever met the Reddy brothers?
Never. They don’t officially have a mining lease in Karnataka.


From Tehelka Magazine, Vol 7, Issue 13, Dated April 03, 2010

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