Power bargain

in Bangalore

TO say that it was a political roller-coaster of a fortnight for Bookanakere Siddalingappa Yeddyurappa would be a gross understatement. With his back to the wall for much of October, the beleaguered Karnataka Chief Minister of the Bharatiya Janata Party (BJP) just about staved off a strong intra-party challenge to his leadership and authority by a group of dissidents led by three brothers, G. Karunakara Reddy, G. Janardhana Reddy and B. Someshekhara Reddy, and their confidant B. Sriramulu, all mining barons from the iron-ore belt of Bellary. Karunakara Reddy and Janardhana Reddy are Ministers for Revenue and Tourism respectively, and Sriramulu is the Health Minister.

After a series of air dashes between Bangalore and New Delhi for confabulations with the partys central leadership and a trip to the pilgrimage centre of Vaishno Devi, a humiliated and chastised Yeddyurappa finally held hands with the leaders of the dissident group on November 8 at the residence of L.K. Advani, the Leader of Opposition in the Lok Sabha, proclaiming that all was going to be well in the party and the government. In the bargain he had to sacrifice a ministerial colleague (Minister for Rural Development and Panchayati Raj Shobha Karandlaje), efficient bureaucrats and, of course, his own stature as the leader of the party. With his emotions getting the better of him on many occasions during the crisis he even cried before the camera Yeddyurappa reasoned that the promises of today far outweighed the fears of tomorrow.

Just before that public display of camaraderie, Yeddyurappa and Janardhana Reddy met at BJP leader Sushma Swarajs house in New Delhi. The Reddy brothers who claimed the support of as many as 50 of the partys 117 legislators in the 224-member Assembly had a 122-point charter of complaints against Yeddyurappa, including what they termed as his autocratic style of functioning. The Reddys wanted him removed and six of his ministerial colleagues replaced with their loyalists, apart from having a say in the postings and transfers of officials in their home district. In the compromise formula, despite pressure, the BJP leadership held firm in its opinion not to dislodge the Chief Minister.

Yeddyurappa, who according to the BJP central leaderships diktat will stay at the helm at least until the Jharkhand Assembly elections or the next State Budget, has been asked to take all sections of the party along, eschew caste-based politics, adopt a less abrasive style of functioning and instead deploy one that is more persuasive. He has also been told that a core committee, including leaders such as Arun Jaitley, Sushma Swaraj, Janardhana Reddy and himself, will first discuss important decisions to be taken. The committee will meet once a month; the first meeting is expected to discuss the induction of new faces into the Yeddyurappa Cabinet.

According to the compromise formula, ministerial portfolios are to be reshuffled; every Minister is to be made a district in-charge; the bureaucracy is to be overhauled; the status quo is to be maintained on toll rates on trucks carrying goods like timber, iron ore, granite and sand; recent postings of key officers in the Bellary administration who have not been to the liking of the Reddy brothers are to be rolled back; heads of boards and corporations are to be reassigned; and Assembly Speaker Jagadish Shettar must be inducted into the Cabinet.

The Reddy brothers had propped up Shettar as a replacement for Yeddyurappa. Shettar, who was kept out of the Cabinet during its formation in May 2008, told Frontline that he was watching the situation. Sources close to him said he was still thinking about joining the government.

Political pundits say the BJP, which came to power for the first time on its own in a southern State, cut a sorry figure by yielding to political blackmail when it could have even expelled the Reddy brothers for anti-party activities or opted to dissolve the Assembly. The very thought of having to face an election in just 18 months, they feel, would have forced most legislators to toe the party line.

Removing Yeddyurappa, who has the backing of the politically strong and numerically superior Lingayat community, from the top post would have been difficult for the BJP since it was he more than any other individual leader who won the Assembly elections in 2008, and 19 of 28 parliamentary seats in 2009 for the Hindutva party.

But BJP insiders say the party had no choice but to give in to the Reddys. Antagonising them, who were all for making the district of Bellary a stronghold of the BJP and also for sending representatives to Parliament from neighbouring Koppal and Raichur, would have posed problems. They are said to have bankrolled the election expenses of many BJP candidates in the Assembly and Lok Sabha elections.

Most crucially, the Reddy brothers apparently played a stellar role in Operation Lotus, carried out to woo independent and wavering legislators to the BJP after the partys tally stood tantalisingly short of a simple majority in the Assembly, and thus helped the party form its first government in the South. But a senior Minister admitted that the recent events had shaken the party badly. According to him, it was a serious wake-up call. He said the crisis had shattered the partys belief that (their) representatives would focus on improving society, not on grabbing power.

He added that it would take a long time for the party to overcome the shenanigans. In the war between the two factions the loser was the party and the dedicated party worker. The real challenge starts now, he said.

For entirely different reasons, the Congress and the Janata Dal (Secular) were mere spectators in this instance. Siding with the Reddys at this juncture would have proven counterproductive for the Congress. The Reddy brothers were instrumental in wresting the long-time Congress citadel of Bellary from it. It would also have been seen as an encouragement to Jaganmohan Reddy, the son of the late Andhra Pradesh Chief Minister Y.S. Rajasekhara Reddy whose family has close business ties with the Bellary brothers. (Jaganmohans supporters have been clamouring for the Chief Ministers job for him after his fathers death.)

For the JD(S), the Reddys have been a thorn in its side. In July 2006, Janardhana Reddy accused its Chief Minister H.D. Kumaraswamy of taking a bribe of Rs.150 crore. A few months later, Sriramulu accused Kumaraswamy of attempting to murder him in the run-up to the Bellary civic body polls.

Government policies and political fortunes of parties in Karnataka have always been influenced by lobbies that represent the liquor, granite, real estate and mining businesses, and medical educational institutions charging capitation fee. But whereas lobbies were prepared to bankroll candidates and parties earlier, being satisfied with propping them up from the outside, the Bellary mining lobby and other cash-rich legislators wanted a share of the power pie.

For Yeddyurappa, being on the back foot was possibly the only way out in the recent crisis, but the question on everybodys lips is why the Bellary brothers, who were initially belligerent, climbed down. All that Janardhana Reddy would say after the patch-up was that they had to heed the words of thayee (mother) [Sushma Swaraj], who had taken a decision looking at all interests.

Not long ago, the Bellary billionaires were known only in their fiefdom and to those who were monitoring the pulse of Karnataka politics. But during the recent crisis the Reddys managed to take centre stage. Who are they, who in 10 years have made themselves a part of the BJPs edifice?

Sriramulu, who belongs to the Valmiki caste (categorised as a Scheduled Tribe), was the first in the group to enter politics. He was a humble Congress councillor in the Bellary municipality, but gave up his seat and his party in 1999 to join as a director of a non-banking finance company, Ennoble Savings and Investment India Pvt Ltd. He then joined the BJP, contested the 1999 Assembly elections and lost. But his association with the Reddy brothers, who ran Ennoble Savings, changed the political landscape of Bellary and Karnataka.

Sons of a police head constable in the Madras Presidency, the Reddy brothers, who hail from Andhra Pradesh, ran their financial business for nearly a decade before it ran aground in the late 1990s. They are alleged to have coughed up nearly Rs.200 crore to pay back debtors. But the busting of their finance business coincided with the booming of their political careers.

In 1999, the Reddy brothers got a useful foothold in politics, with the BJP looking for support from all quarters as its candidate Sushma Swaraj took on Congress leader Sonia Gandhi in the Bellary parliamentary elections. Sushma Swaraj lost the elections, but for the BJP it was the beginning of a run that saw the party gain control of the Bellary corporation and the zilla and taluk panchayats.

The brothers, who acquired a few iron mines in the early 2000s (they own four mines in Andhra Pradesh, but none in Karnataka), also benefited immensely from the spurt in the global demand for iron ore. Today they own a fleet of expensive cars, houses, helicopters and whatever else money can buy. In philanthropic bids, they also conducted mass marriages and distributed money to those who sought their blessings and for other social and religious causes.

In 2004, the Reddy brothers and Sriramulu helped the BJP win the Bellary Lok Sabha seat for the first time wresting it from the Congress and also ensured that the party triumphed in three of the nine Assembly seats from the district. In the 2008 Assembly elections the party won eight of the nine seats, with the quartet playing a major role. Joladarashi Shanthi, Sriramulus younger sister, won the Bellary parliamentary seat in 2009.

The quartets meteoric rise from the Bellary badlands to the power centre of Bangalore has had its share of controversies. The Karnataka Lokayukta has passed strictures on their alleged role in illegal mining in the State. In an annexure to the Lokayukta report, submitted by Dr U.V. Singh, a senior forest officer, the Obulapuram Mining Company (OMC), whose directors include Janardhana Reddy, Karunakara Reddy and Sriramulu, has mining leases in Andhra Pradesh, bordering Bellary district, but has encroached into Karnataka by entering into a raising contract with Hind Traders, a mining lessee on the Karnataka side of the border.

Raising contracts are agreements between the holder of a mining lease and a contractor, entrusting the work of carrying out mining and selling the minerals or using them on payment of a premium or a consideration to the holder of the mining lease. But, according to the Lokayukta report, the term raising contract is not defined in the Indian Contract Act, 1872; the Mines and Minerals (Development and Regulation) Act, 1957 (Central Act 67 of 1957); the Mineral Concession Rules, 1960; or the Karnataka Minor Mineral Concession Rules, 1994.

The Lokayukta report calls for the raising contract system to be stopped forthwith since it is against the law and one of the major sources of irregularities and for action to be initiated against all the lessees who have adopted the system. But Karnataka has initiated no action so far.

Interestingly, in recent weeks, the Congress in Andhra Pradesh seems to be backing action by the forest department. Cases have been filed against Janardhana Reddy by the Anantapur Divisional Forest Officer (DFO) in Andhra Pradesh. Kallol Biswas, the DFO, told Frontline that the department had served notices on them under the Andhra Pradesh Forest Act, 1967, for constructing a road illegally through the Bellary Reserve Forest and under the Andhra Pradesh Forest Produce Transportation Rules, 1970, for transporting iron ore illegally through the reserve forest.

The Reddys have been bringing iron ore from two mines [Havinal Mariswamiappa Mines or Hind Traders and Mehaboob Transport Company mines] in Karnataka but showing that the ore has been mined in Andhra Pradesh. Their mines, which are on the Andhra side, are lying fallow, there only being shallow pits of around two metres. This ore is being transported from the pitheads through the inter-State border by illegally forming a road through the Bellary reserve forest. The ore is also being dumped at Malpangudi village adjacent to the reserve forest, he said.

Biswas also disclosed that another company of the Reddys, Anantapur Mining Company, which operated in a smaller area of 6.5 hectares and had drawn a mines permit to mine one million tonnes, had not furnished a certificate from the pollution control board as required by the Forest Conservation Act. The DFO has issued notices to the Reddys for disturbing lease [boundaries], and village and state boundary pillars while undertaking mining and road construction activity.

The Andhra Pradesh government has set up a study team of three senior forest officers to probe whether the OMC has done any illegal work in the Obulapuram mines in the State. It is also likely to depute a team of senior officials from the Mines and Geology Department to probe the allegations of lease violations by the OMC.

The money to be made from mining iron ore is phenomenal. Thanks to mechanisation, especially the use of proclainers (heavy equipment used in mining), a truck can be loaded with nearly 40 tonnes of ore in under 10 minutes. While the cost of labour to load the truck is just Rs.300 to Rs.400, the iron ore sells for as much as Rs.80,000.

But much of the activities of the Reddys would not have taken place without government support. Said a senior Congressman: Even our party is to blame for their rise. After all, the Reddy brothers got a foothold into mining during the chief ministership of S.M. Krishna.

The Reddys also apparently enjoyed the patronage of the Rajasekhara Reddy government in Andhra Pradesh. In September 2008, his government overruled objections from the State forest department and recommended that three mining companies Bellary Iron Ore Pvt Ltd, Y Mahabeleshwarappa and OMC be given exemption from obtaining transit permits for the transportation of minerals, as required under the Andhra Pradesh Forest Produce Transportation Rules, 1970.

The popularity of the Reddy brothers and Sriramulu, however, seems to be on the wane. As Ministers, they have not endeared themselves to the people. During the early weeks of the swine flu epidemic, when a number of cases in Bangalore threatened to overtake even that in Pune, Sriramulu was at a resort in Bellary. His explanation that he was monitoring the situation through telephone convinced no one.

The Reddys insistence for an airport at Bellary by acquiring 1,200 acres (one acre is 0.4 hectare) of land much of it fertile land from the villages of Chagnur, Siriwarmuch and T Budihal has also dented their popularity. Many say that air traffic to Bellary does not warrant the building of an airport. The airport at Torrangal, 35 km away, operates just two flights a week. Their whisking away of legislators and housing them at luxurious resorts in Hyderabad and Goa during the political crisis, when they should have been supervising the relief work meant for lakhs of people displaced by the floods, has also angered people.

For Yeddyurappa, his political survival itself may seem to be a victory. But with the Reddys promising to be more furious in the future if things do not go according to their wishes, the victory could be a pyrrhic one. Yeddyurappa may also find it tough to prompt his dishevelled forces to act and stay together.