SMK, HDK & the case of illegal mining

The mining scam which has changed the very outlook of Karnataka politics has now come to bite some former Chief Ministers-S MKrishna, H D Kumaraswamy and N Dharam Singh. A complaint was made before the Lokayukta court which has sought some additional documents. The Lokayukta police says that once the court gives the green signal it would probe into the matter.

The complaint filed by one Y Abraham, a resident ofBangalorewho is the president of the Karnataka Anti Graft and Environmental Forum names the three former CM’s in it apart from other IAS officers as well. The complaint filed under Section 200 of the Code of Criminal Procedure states that the accused persons should be punished for corruption and causing loss to the public exchequer.

It is stated that S M Krishna who is named as accused one had committed various acts of omission and commission of illegalities in relation to the grant of leases for mining in Karnataka during his tenure as the Chief Minister. It is stated that during his tenure as the CM, an agreement dated 17-01-2002 Kalyani Ferrous has paid sales advance of Rs, 6 crores as security for purchase of iron ore. Provision for payment of

advance or security deposit is found in all agreements because MML releases

iron ore or iron ore fines sold by it only after full purchase amount is

deposited in advance. Agreement with Kalyani Ferrous requires MML to pay

interest on that advance amount at the rate of 10% per annum. There is no

provision for payment of interest on such advance or security deposit in

agreements entered into with other companies. Interest paid on that amount

by MML to Kalyani up to 2006-2007 comes to about Rs. 2.5 crores. This is

amongst others another favour shown to Kalyani at the cost of MML, a fully

State Government owned company.

According to MOU dated 17-01-1997 MML is to place at the disposal of Vijayanagar Mines Pvt.Ltd, VMPL Thimmappanagudi mines and Jindal, which had applied for lease of Kumaraswamy‘s A, D and E blocks, would place at the disposal of VMPL said A, D and E blocks that may be granted to them on lease by the Government.

In pursuance to the MOU, as agreed, MML placed Thimmappanagudi mines at the

disposal of VMPL and the VMPL is permitted to do mining operation there since 1999 –vide clause 6 of service agreement dated 2-2-1999, and is supplying iron ore to Jindal steel plant. It is learnt that Jindal, as on to this day, has not placed any mines at the disposal of VMPL. (ii) As per the MoU dated 17.01.1997, MML was to receive premium on the sale of two grades of iron ore viz., the lumpy ore and the iron ore fines at 10% and 6% of the ruling market price respectively. Against this understanding, MML has consistently invoiced the premia claim at the rate of Rs.30/- per MT of lumpy ore and Rs.6/- per MT of iron ore fines. The premia invoiced are much below the percentage value calculated on the basis of the prevailing MMTC

prices for different grades of iron ore. This apart, VMPL, have also generated other grades of iron ore viz., basic ore, low grade lumps and low grade calibrated ores during the period under report. The supply of these grades of ore were not foreseen at the time of execution of MOU and consequently also for purposes of calculation of premia payable by the VMPL. MML should have taken up the matter with VMPL and claimed premia thereon. In the absence of any such arrangement, MML has suffered by not realizing premia on these grades of ores.  According to AG premium amount

was not revised from time to time on the basis of the prevailing market rate and on this count there is short payment of Rs. 3.22 crores by VMPL

upto 2004-05. In its reply to AG report MML has not stated anything about

the merits of the observations of AG. The only remark made by MML is that a

copy of the report of AG has been sent to VMPL asking it to pay the amount

stated by AG and no reply has been received from VMPL so far. The reply

given by MML that it has asked VMPL to pay the amount stated by AG

indicates that MML agrees with the view expressed by AG. The loss suffered

by the MML consequent to raising invoices for premia at rates below that

agreed in MoU in respect of iron ore lumps and iron ore fines and failure

to collect premia in respect of other grades of iron ore that are not

mentioned in the MOU, but generated and marketed from Thimmappanagudi Mines

is reported in table 01 and 01A of the report of Sri Gaikwad team at

Annexure-C. The total loss suffered by MML on this account is

Rs.25,72,74,368/-.(Twenty Five Crore, Seventy two lakhs, eventy four

thousand, three hundred and sixty eight rupees only).

The other allegation is that the accused one had de-reserved thousands of acres of forest land inBellarydistrict and else where and sactioned it to 10 private companies in the year 2003 despite opposition from the then Minister forForestand the then

Secretary, Forest Department, expressing his disagreement towards de-reservation. This statement made in the Karnataka State Legislative Assembly, was much before the Lokayukta was actually entrusted with the investigation of illegal mining was referred by the Government of Karnataka in their Order No. CI 164 MMM 2006 dated 12th March 2007 for investigation and Report under Sec. 7(2A) of the Lokayukta Act, is validated by the Lokayukta Report stating that the Government in its orders vide notification No. CI 16 MMM 2003 and No.CI 33 MMM 1994 both Dated: 15.03.2003, de-reserved for private, mining an area of 11620 square km in the State, meant for State exploitation/ mining by the public sector and notified the surrender of an area of 6832.48 hectares of prime iron ore bearing lands respectively, which has paved way for distribution of public assets to select private individuals,/ entities without regard to their professional or technical or business background.

The Cabinet Section sent the file to Secretary Forest Department on 28/09/2002 for remarks on the statement in the Cabinet note that “de-reservation is proposed in forest areas which have lost vegetative cover”. Secretary, Forest Department made a note in paras 232 and 233 n.f. and sent the file to Principal Secretary on 04-10-2002. Para 233 n.f. made by him reads thus.-  “Forestareas may not be included in the proposed de-reservation of mineral bearing areas. As and when a forest area is considered absolutely necessary for mining it may be examined on merits for diversion for non-forest activities under the E.C .Act.” Principal Secretary, Forest Department sent back the file asking for another file on 10-10-2002 and the Secretary sent the file along with the other file (it does relate to this subject) to the Principal Secretary on 11-10-2002. In para 236 n.f. he observed as follows. “The subject matter of this file is a

proposal for de-reservation of mineral bearing areas. As proposed at para

233 pre page, forest areas may not be included in the proposed de-reservation”. He approved the note made by the Secretary in para 233 n.f. and sent the file to the Minister of State and Minister forForest, who approved the notes made by the Principal Secretary. The notes made by the officers of the Forest Department does not clearly indicate whether there is forest in any of the blocks proposed for de-reservation and if there are forest areas whether they have lost vegetative cover and whether the averment in the cabinet note is correct or not. On a perusal of the

movement dates of the file it is clear that the Forest Department has not

obtained any report from the field officers about the nature of the areas

proposed for de-reservation. The information wanted by the Cabinet section

was whether the statement in the Cabinet note that de-reservation is

proposed in forest areas which have lost vegetative cover is factually

correct. That information has not been furnished by theForestdepartment.

Cabinet section did not pursue that matter further. Without getting that

information the subject was placed before the Cabinet and the proposal was

approved by the Cabinet. The Cabinet has not been informed all relevant and

necessary facts. De-reservation order as such is not found in the file but a

notification dated 15-03-2003 informing the public that those lands are

available for allotment to the public is found in the file  It is clear

from the above that though the considered decision of the Government was

not to de-reserve forest land and strategic mineral bearing areas like iron

ore, manganese, chromate and lime stone (steel grade), that aspect was not

properly verified and reserve forests and State forests and strategic

mineral bearing areas have been de-reserved. The officers of the C&I

Department, Cabinet section and the Secretary and Principal Secretary

Forest Department who dealt with the file are responsible for it.

The above act of the 1 st Accused was a shameful beginning or introduction of the Large Scale destruction of Reserved Forest Areas and the actual advent of large scale illegal mining which/who who could be termed as the Author of

all the mining Scams.

The complaint against Dharam Singh goes on to state that he along with other officials had  committed misconduct and have caused huge financial loss to the State

to an extent of Rs. 31,01,89,185/- to the exchequer by permitting illegal

transportation of 3,09,113 M.T. of iron ore.

In the complaint against H D Kumaraswamy, the complaint states that during his tenure he was accused of taking a bribe of Rs 150 crore as bribes from miners in July 2006, leading to a speculation that the JD(S) was under the influence of the mining lobby.  It is alleged that he had  illegally approved the mining lease in favour of Shree.Sai.Venkateshwara Minerals, as laid out in wherein  the Director of Mines and

Geology, after considering the objections raised by the Government, had

built up a proposal and submitted to the State Government stating that there are many applications filed in this behalf and it is left to the State Government to take a decision. He also submitted the details of other 28  applications received in his office in the subject matter. Subsequently, a note from the Secretary (Sri. D.V. Prasad) of the then Hon’ble Chief Minister) was sent to the Secretary to Government, Commerce

and Industries Department to submit the file of SSVM for perusal. The Note

was numbered as Mu.Ma.Ka 2414/2007 dated *5/10/2007*, just three days

before the 3rd Accused demitted office as Chief Minister of the state.

Following the directions issued in the above said note, a note

have perused the records. The Mining Lease in respect of 550 acres of land in Jog, Thimmappagudi, Vhavihalli, NEB Range, Sandur Taluk, Bellary District is granted in favour of M/s. Sri Sai Venkateshwara Minerals”*

The file was then sent back to the Secretary (Mines) *on 6/10/2007*. This approval accorded is in violation of Rule 59 of the M.C. Rules. It is stated here that the approval in this case was given without taking necessary relaxation from the Central Government under Rule 59(2) of the M.C. Rules, which was a requirement under Rule 59(1)(a) of the M.C. Rules.

Further the complaint speaks about Kumaraswamy indulging in illegalities in the case of  M/s.Janthakal Enterprises ML NO.593/993, a mining lease No.593/993 at Hirekandawadi and Tanigehalli Villages of Holalkere Taluk, Chitradurga Dist. Was granted in 1965 in favour of one Sri K. Raghavendra Rao and further it is claimed by M/s. Janthakal Enterprises that the said mine has been transferred in its favour in the year 1967 though no Government Order is available in any file/ records of the State Government as well as with the lessee.


Author: Vicky Nanjappa

just a reporter

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