Illegal mining in India
Encyclopedia
Illegal mining in India is widespread in various ore-rich states of India, and has generated controversy, which spans encroachment of forest areas, underpayment of government royalties, conflict with tribals regarding land-rights . The spill-over of the effects of legal mining into problems such as Naxalism and the distortion of Indian democracy by mixed political and mining interests, has gained international attention.
region of Karnataka
. This iron ore is alleged to have been illegally mined after paying a minuscule royalty to the government. The major regularities involve mines in Bellary, including those of Obulapuram Mining Company
owned by G. Karunakara Reddy
and G. Janardhana Reddy
who are ministers in the Government of Karnataka
.
The premises belonging to BJP MLA from Koodligi B. Nagendra and BJP MLA from Kampli T.H. Suresh Babu, both considered close to the Reddy ministers, were raided in Bangalore as well as in their home towns .
Searches were also conducted in the rooms allotted to Mr. Suresh Babu and Mr. B. Nagendra in the Legislators Home in Bangalore. According to the sources in the IT Department, a large number of documents have been seized, and their bank accounts have been frozen. The raids were said to be conducted at over 50 premises.
The raids assume importance in the background of allegations from opposition parties that the ruling BJP is paying off MLAs from other parties to resign from their post.
An important aspect of the operation is that it appears to be targeted against close confidants of the Reddy brothers. A large number houses, offices, business establishments, mining and construction firms have been raided by the IT Department.
Sources in the Income Tax Department have also indicated that the residences and offices of one of Mr. Reddy’s personal assistants, Ali Khan, and a legal advisor, Raghavacharlu, were also searched by the officials at Bellary, Hospet and Bangalore.
The raids were launched simultaneously at many cities including Bangalore, Hospet, Bellary, Hubli, Belgaum by officials of the Karnataka and Goa region.
Income tax sleuths unearthed under-invoicing and tax evasion of around Rs 86 crore by the Obulapuram Mining Company (OMC), run by Karnataka's Reddy brothers and also their trusted confidante and state health minister B Sriramulu.
The scam, that can embarrass Karnataka's BJP government further, is said to have alarmed the top guns in the state. The CBI is investigating illegal mining transactions in Andhra Pradesh. Ministers G Janardhana Reddy, G Karunakar Reddy and Sriramulu have mining business in AP.. The company had evaded Rs 86,42,88,802 during 2007-08.
Official sources said after getting clues to tax evasion by OMC B N Mohan, Sibichen Mathew and G M Belagali of Bangalore (Commissionerate) Central circle were assigned to work on the case. They found that the OMC had entered into a MoU with a one-dollar company of Singapore to camouflage the company's income suppression.This report was recorded in the book Let us Share by the Finance Ministry.
Officials found that the one-dollar company, GLA Trading International (GLATI), was established on November 30, 2007, with Janardhana Reddy as one of its directors. GLA, presumed to be named after Janardhana Reddy's wife Gali Laxmi Aruna, has offices in Singapore, Dubai and the British Virgin Islands, which is a `tax haven'.
"OMC's transactions through the MoU with GLATI are convoluted and devised to evade tax payment in India," assessing officers said in the report.
A comparative study of shipping bills for export with other companies, which are exporting the same grade material, confirmed the malpractice by OMC. According to the report, OMC signed the MoU with GLATI to sell iron ore only to evade tax payment in India.
For the similar grade of iron ore or ferrous content (FE), OMC had under-invoiced. The per tonne rate of iron ore exported to GLATI ranged between $76.14 and $98.24 as compared to per tonne rate of $144 to $165.22 of other export sales of ore.
When officials sought explanation from OMC, the Reddys claimed it suppressed sales for developing stronger relationship worldwide with global buyers through GLATI for financial stability against price fluctuations.
This explanation was considered inept by the investigating agency. According to investigators, it's difficult to believe a business house like the Reddys would enter into such an MoU with an offshore company to secure financial stability against price fluctuations from a one dollar company of Singapore and that too without any knowledge of its business, its board of directors and its standing in the line of business. The OMC has taken the issue to an appellate authority.
uncovered major violations and systemic corruption
in mining in Bellary, including in the allowed geography, encroachment of forest land, massive underpayment of state mining royalties relative to the market price of iron ore and systematic starvation of government mining entities. Justice N. Santosh Hegde resigned from the Lokayukta
position on 23 June 2010 citing inability to be effective in his anti-corruption mandate owing to a non-cooperative Government of Karnataka
In January 2010 Mr Kharge questioned the governoment about transfer of Dileepkumar PCCF who refused to sign the report but Government brought S Nagaraja as PCCF who signed the report.
that sometimes the actual mining areas are not related to the sketch given with the applications without officials crosschecking them. Further mining applicants falsely claim a prohibited forest area as a revenue area. Finally the actual area of the mine is much bigger than the claimed area.
The Indian Bureau of Mines rules which control the type of mining, allow a maximum mining depth six metres to prevent environmental degradation. But miners have flouted this rule to over-extract iron-ore. For example, if they are allowed to take 100 metric tones, mines take 1,000 metric tonnes. Officials at road check posts reportedly collude in a massive under-counting of lorries and trucks transporting the iron-ore from the Bellary mines to the ports. News reports suggest that only 200 trucks are reported as against 4000 plying everyday.
where illegally mined ore which had been seized was surreptitiously exported from the port. Karnataka Chief Minister Yeddyurappa admitted to an illegal iron-ore export racket at Belekeri Port involving 35 lakh metric tonnes of iron ore.
. The report describes the illegal money transfers to foreign companies and tax shelters by mining entities such as Obulapuram Mining Company
, Associated Mining Company, GLA Trading and GJR Holdings owned by the Reddy Brothers.
The report tells about illegal mining, bureaucrats-politicians-businessman nexus. Even banks and public sector companies also participated in the loot. There are more than 100 names involved in illegal operation. NDMC, Adani enterprise, JSW Steel are some major name in fraud list. Charges against these companies are illegal movement of iron ore from mining yard without permits and without paying royalties, forest encroachment, mining lease violations, overloading of trucks and sandry violation etc. The iron ore was illegally exported to china through ports of southern India and payment is made through more than 4000 banks account. Damage to environment can not be calculated.This report was prepared mainly from the Income Tax Commissionerate of Central Circle.
mining by Vedanta Resources
in tribal areas of Orissa
have led to conflicts in land rights. Coal mining has run into trouble as well in Angul
district over land issues.
, Uttarakhand, where it touches the plains for the first time. This is despite the fact that quarrying has been banned in Kumbh Mela
area zone covering 140 sq km area in Haridwar. On June 14, Swami Nigamanada, a 34-year old monk who was fasting since February 19, 2011 against illegal mining and stone crushing along the Ganga near Haridwar
, died at the Himalayan Hospital in Jollygrant in Dehradun, after alleged poisoning by stone crushing mafia. His death put spotlight on the activity including intervention by Union Environment minister.
Illegal iron ore mining in Karnataka
Rising global iron-ore prices driven by Chinese demand brought focus to the iron ore rich BellaryBellary
Bellary is a historic city in Bellary District in Karnataka state, India.-Origins of the city's name:There are several legends about how Bellary got its name....
region of Karnataka
Karnataka
Karnataka , the land of the Kannadigas, is a state in South West India. It was created on 1 November 1956, with the passing of the States Reorganisation Act and this day is annually celebrated as Karnataka Rajyotsava...
. This iron ore is alleged to have been illegally mined after paying a minuscule royalty to the government. The major regularities involve mines in Bellary, including those of Obulapuram Mining Company
Obulapuram Mining Company
Obulapuram Mining Company also known as OMC or OMCPL is an iron ore mining company located in Karnataka and Andhra Pradesh in India. The company is owned by the brothers, G. Karunakara Reddy, G. Janardhana Reddy and G. Somashekara Reddy, who were ministers in the Government of Karnataka...
owned by G. Karunakara Reddy
G. Karunakara Reddy
G. Karunakara Reddy is a member of the 14th Lok Sabha of India. He represents the Bellary constituency of Karnataka and is a member of the Bharatiya Janata Party political party....
and G. Janardhana Reddy
G. Janardhana Reddy
Gali Janardhana Reddy is a Indian politician with the Bharatiya Janata Party and one of the richest politicians of Karnataka. He has been implicated in the massive illegal mining scandal in Bellary and the related Belekeri port scam...
who are ministers in the Government of Karnataka
Government of Karnataka
The Government of Karnataka is a democratically elected body with the Governor as the constitutional head. The Governor who is appointed for a period of five years appoints the Chief Minister and his council of ministers...
.
Income Tax Raid on Gali Brothers
In one of the largest single-day operations in recent times in Karnataka, the officials of the Income Tax Department raided the residential premises belonging to Health Minister B. Sriramulu in Bangalore, and offices and residences of two BJP legislators, who are involved in mining business.The premises belonging to BJP MLA from Koodligi B. Nagendra and BJP MLA from Kampli T.H. Suresh Babu, both considered close to the Reddy ministers, were raided in Bangalore as well as in their home towns .
Searches were also conducted in the rooms allotted to Mr. Suresh Babu and Mr. B. Nagendra in the Legislators Home in Bangalore. According to the sources in the IT Department, a large number of documents have been seized, and their bank accounts have been frozen. The raids were said to be conducted at over 50 premises.
The raids assume importance in the background of allegations from opposition parties that the ruling BJP is paying off MLAs from other parties to resign from their post.
An important aspect of the operation is that it appears to be targeted against close confidants of the Reddy brothers. A large number houses, offices, business establishments, mining and construction firms have been raided by the IT Department.
Sources in the Income Tax Department have also indicated that the residences and offices of one of Mr. Reddy’s personal assistants, Ali Khan, and a legal advisor, Raghavacharlu, were also searched by the officials at Bellary, Hospet and Bangalore.
The raids were launched simultaneously at many cities including Bangalore, Hospet, Bellary, Hubli, Belgaum by officials of the Karnataka and Goa region.
Income tax sleuths unearthed under-invoicing and tax evasion of around Rs 86 crore by the Obulapuram Mining Company (OMC), run by Karnataka's Reddy brothers and also their trusted confidante and state health minister B Sriramulu.
The scam, that can embarrass Karnataka's BJP government further, is said to have alarmed the top guns in the state. The CBI is investigating illegal mining transactions in Andhra Pradesh. Ministers G Janardhana Reddy, G Karunakar Reddy and Sriramulu have mining business in AP.. The company had evaded Rs 86,42,88,802 during 2007-08.
Official sources said after getting clues to tax evasion by OMC B N Mohan, Sibichen Mathew and G M Belagali of Bangalore (Commissionerate) Central circle were assigned to work on the case. They found that the OMC had entered into a MoU with a one-dollar company of Singapore to camouflage the company's income suppression.This report was recorded in the book Let us Share by the Finance Ministry.
Officials found that the one-dollar company, GLA Trading International (GLATI), was established on November 30, 2007, with Janardhana Reddy as one of its directors. GLA, presumed to be named after Janardhana Reddy's wife Gali Laxmi Aruna, has offices in Singapore, Dubai and the British Virgin Islands, which is a `tax haven'.
"OMC's transactions through the MoU with GLATI are convoluted and devised to evade tax payment in India," assessing officers said in the report.
A comparative study of shipping bills for export with other companies, which are exporting the same grade material, confirmed the malpractice by OMC. According to the report, OMC signed the MoU with GLATI to sell iron ore only to evade tax payment in India.
For the similar grade of iron ore or ferrous content (FE), OMC had under-invoiced. The per tonne rate of iron ore exported to GLATI ranged between $76.14 and $98.24 as compared to per tonne rate of $144 to $165.22 of other export sales of ore.
When officials sought explanation from OMC, the Reddys claimed it suppressed sales for developing stronger relationship worldwide with global buyers through GLATI for financial stability against price fluctuations.
This explanation was considered inept by the investigating agency. According to investigators, it's difficult to believe a business house like the Reddys would enter into such an MoU with an offshore company to secure financial stability against price fluctuations from a one dollar company of Singapore and that too without any knowledge of its business, its board of directors and its standing in the line of business. The OMC has taken the issue to an appellate authority.
Interim Lokayukta report of December 2008
A report published by the LokAyuktaLokAyukta
The Lokayukta is an anti-corruption ombudsman organization in the Indian states.The Administrative Reforms Commission headed by Morarji Desai submitted a special interim report on "Problems of Redressal of Citizen's Grievances' in 1966...
uncovered major violations and systemic corruption
Systemic corruption
Systemic corruption is corruption which is primarily due to a weaknesses of an organisation or process.It can be contrasted with individual officials or agents who act corruptly within the system....
in mining in Bellary, including in the allowed geography, encroachment of forest land, massive underpayment of state mining royalties relative to the market price of iron ore and systematic starvation of government mining entities. Justice N. Santosh Hegde resigned from the Lokayukta
LokAyukta
The Lokayukta is an anti-corruption ombudsman organization in the Indian states.The Administrative Reforms Commission headed by Morarji Desai submitted a special interim report on "Problems of Redressal of Citizen's Grievances' in 1966...
position on 23 June 2010 citing inability to be effective in his anti-corruption mandate owing to a non-cooperative Government of Karnataka
Government of Karnataka
The Government of Karnataka is a democratically elected body with the Governor as the constitutional head. The Governor who is appointed for a period of five years appoints the Chief Minister and his council of ministers...
In January 2010 Mr Kharge questioned the governoment about transfer of Dileepkumar PCCF who refused to sign the report but Government brought S Nagaraja as PCCF who signed the report.
Collusion of officials and politicians in permitting illegal mining
The guidelines under the Central and the state enactments, call for a sketch of the mining area when a mining lease is applied for. It was found by the LokayuktaLokAyukta
The Lokayukta is an anti-corruption ombudsman organization in the Indian states.The Administrative Reforms Commission headed by Morarji Desai submitted a special interim report on "Problems of Redressal of Citizen's Grievances' in 1966...
that sometimes the actual mining areas are not related to the sketch given with the applications without officials crosschecking them. Further mining applicants falsely claim a prohibited forest area as a revenue area. Finally the actual area of the mine is much bigger than the claimed area.
The Indian Bureau of Mines rules which control the type of mining, allow a maximum mining depth six metres to prevent environmental degradation. But miners have flouted this rule to over-extract iron-ore. For example, if they are allowed to take 100 metric tones, mines take 1,000 metric tonnes. Officials at road check posts reportedly collude in a massive under-counting of lorries and trucks transporting the iron-ore from the Bellary mines to the ports. News reports suggest that only 200 trucks are reported as against 4000 plying everyday.
Underpayment of royalties to state
There is a huge difference in the market price of the ore and the royalty specified by the government as well as faulty measurement mechanisms of amount of ore extracted. It was found that 35 lakh (3.5 Million) tonnes of ore were illegally exported without paying a rupee of royalty to the exchequer, resulting in a loss of about Rs 16085 crores. With ore prices of USD 100-120 per ton, 3.5 Million tonnes adds up to about 350-4000 Million USD. There are proposals to link the royalties to the market price of iron-ore. There is also a proposal by the ministry of Environment and Forests to levy a tax.Environmental damage
According to the Lok Ayukta Report, there have been severe ecological changes due to illegal mining. Certain species of animals, like the sloth bear, that in the Bellary region have disappeared. Medicinal plants from the area do not grow anymore. The entire system of rain has changed in the district of Bellary. It is reported that the entire area surrounding the mining area is denuded of greenery and has no agricultural activity.Belekeri port scandal
Related is the Belekeri port scamBelekeri port scam
The Belekeri port scam relates to 3.5 million tons of confiscated iron ore that was exported illegally from Belekeri port near Karwar in Karnataka. After Deputy Conservator of Forests R. Gokul seized the ore and the high court refused to permit it to be exported, a large part of it was...
where illegally mined ore which had been seized was surreptitiously exported from the port. Karnataka Chief Minister Yeddyurappa admitted to an illegal iron-ore export racket at Belekeri Port involving 35 lakh metric tonnes of iron ore.
Related road damage, accidents and loss of lives
The lack of effective regulation in the mining and transport of iron ore has adversely impacted road safety. Overloaded Trucks carrying ore have caused hundreds of fatal accidents on the roadways leading to ports such as Belekeri and damaged national highways in the region.Recommendation to ban iron-ore exports
The Indian government (steel ministry and law ministry) is considering a ban on exports of iron ore and limit mining only to captive iron and steel production units. This has been opposed by the mining ministry citing massive loss of employment.Lokayukta Report of July 2011
The Lokayukta Report on illegal mining in Karnataka details the methods in which miners, government officials and ministers colluded to defraud the government of mining revenues. The report details the complete breakdown of democratic governance in the bellary area and uncovers the "zero risk system", a protection and extortion racket, masterminded by G. Janardhana ReddyG. Janardhana Reddy
Gali Janardhana Reddy is a Indian politician with the Bharatiya Janata Party and one of the richest politicians of Karnataka. He has been implicated in the massive illegal mining scandal in Bellary and the related Belekeri port scam...
. The report describes the illegal money transfers to foreign companies and tax shelters by mining entities such as Obulapuram Mining Company
Obulapuram Mining Company
Obulapuram Mining Company also known as OMC or OMCPL is an iron ore mining company located in Karnataka and Andhra Pradesh in India. The company is owned by the brothers, G. Karunakara Reddy, G. Janardhana Reddy and G. Somashekara Reddy, who were ministers in the Government of Karnataka...
, Associated Mining Company, GLA Trading and GJR Holdings owned by the Reddy Brothers.
The report tells about illegal mining, bureaucrats-politicians-businessman nexus. Even banks and public sector companies also participated in the loot. There are more than 100 names involved in illegal operation. NDMC, Adani enterprise, JSW Steel are some major name in fraud list. Charges against these companies are illegal movement of iron ore from mining yard without permits and without paying royalties, forest encroachment, mining lease violations, overloading of trucks and sandry violation etc. The iron ore was illegally exported to china through ports of southern India and payment is made through more than 4000 banks account. Damage to environment can not be calculated.This report was prepared mainly from the Income Tax Commissionerate of Central Circle.
Illegal mining in the Aravali Range
Illegal mining activity has been reported in the Aravali Range.Bauxite and coal mining in Orissa
BauxiteBauxite
Bauxite is an aluminium ore and is the main source of aluminium. This form of rock consists mostly of the minerals gibbsite Al3, boehmite γ-AlO, and diaspore α-AlO, in a mixture with the two iron oxides goethite and hematite, the clay mineral kaolinite, and small amounts of anatase TiO2...
mining by Vedanta Resources
Vedanta Resources
Vedanta Resources plc is a global mining and metals company headquartered in London, United Kingdom. It is the largest mining and non-ferrous metals company in India and also has mining operations in Australia and Zambia. Its main products are copper, zinc, aluminium, lead and iron ore...
in tribal areas of Orissa
Orissa
Orissa , officially Odisha since Nov 2011, is a state of India, located on the east coast of India, by the Bay of Bengal. It is the modern name of the ancient nation of Kalinga, which was invaded by the Maurya Emperor Ashoka in 261 BC. The modern state of Orissa was established on 1 April...
have led to conflicts in land rights. Coal mining has run into trouble as well in Angul
Angul
Angul may refer to:* Angul, town in India* Angul district, India...
district over land issues.
Illegal mining and stone crushing in Ganga river bed
Illegal mining in Ganga river riverbed for stones and sand for construction work has been a long problem in Haridwar districtHaridwar District
Haridwar district is a district in the state of Uttarakhand, India. It is headquartered at Haridwar which is also its largest city. The district is ringed by the districts Dehradun in the north and east, Pauri Garhwal in the east and the Uttar Pradesh districts of Muzaffarnagar and Bijnor in the...
, Uttarakhand, where it touches the plains for the first time. This is despite the fact that quarrying has been banned in Kumbh Mela
Kumbh Mela
Kumbh Mela is a mass Hindu pilgrimage in which Hindus gather at the Ganges river.The normal Kumbh Mela is celebrated every 3 years, the Ardh Kumbh Mela is celebrated every six years at Haridwar and Prayag, the Purna Kumbh takes place every twelve years, at four places Prayag, Haridwar, Ujjain,...
area zone covering 140 sq km area in Haridwar. On June 14, Swami Nigamanada, a 34-year old monk who was fasting since February 19, 2011 against illegal mining and stone crushing along the Ganga near Haridwar
Haridwar
Haridwar is an important pilgrimage city and municipality in the Haridwar district of Uttarakhand, India...
, died at the Himalayan Hospital in Jollygrant in Dehradun, after alleged poisoning by stone crushing mafia. His death put spotlight on the activity including intervention by Union Environment minister.