Although Reddy claims that he had no mining business in Karnataka state, documents related to his export of iron-ore documents reveal a different story.
Although G Janardhana Reddy claims that he had no mining business in Karnataka state, documents related to his export of iron-ore documents reveal a different story.
The Lok Ayukta report on illegal mining showed that Obulapuram Mining Company (OMC) in Bellary had Janardhana Reddy, G Lakshmi Aruna, G Karunakara Reddy, D Parameshwara Reddy, and B Sree Ramulu as directors at the relevant time.
A private company Man-Go Pub was registered on October 28, 2004 in Singapore to provide entertainment, food and beverage. Its director was Seah Seow Kang Steven. In 2007, Arangannal was made its director, among others.
An application was filed the same year to change the company’s name to GLA Trading International. The activities of this company were also proposed to be changed to general wholesale trade, including general imports and exports.
This was done by passing a special resolution on November 30, 2007. On December 19, 2007, Janardhana Reddy was appointed GLA’s director.
One share of the company was transferred in favour of GJR Holdings registered on December 21, 2007 in Isle of Man, a tax heaven. In June 2009, the share was further transferred in favour of Interlink Services Group based in British Virgin Islands, another tax heaven.
The role of GJR Holdings International Limited and Interlink Services Group Limited under the above circumstances required further probe by the competent authorities, the report said.
After the Lok Ayukta initiated an inquiry into the illegal exportation of iron ore, Reddy resigned as director of the above company on December 30, 2009. But during the period when Reddy was the director of the company, GLA Private Limited imported iron ore to the tune of 852,033 MTs from OMC, Bellary.
The origin of the ore was shown at ports from Karnataka. There was no export of iron ore before or after the period when Reddy was the director of GLA, from OMC. This was proved by the export data obtained from the customs department.
Responding to a request made by the investigation team, the income tax department, on April 19, 2011, provided tax assessment orders made on April 26, 2011 of OMC. This order showed under invoicing of cost of iron ore and export sales to GLA Trading International, Dubai, by OMC.
The assessment order made out a case of relationship between the OMC and GLA Trading International Limited, Dubai, and the quantum of export made and the value declared therein.
After studying the details of export of iron ore made by OMC, the investigating team sought all details of export of iron ore from the customs department 0f Kakinada, Krishnapatnam, Visakhapatnam, Chennai, Mangalore, Belekeri,
Karwar, Murmagao and Panaji.
The details were further verified by the investigation team with regard to GLA as consignee.
The details received showed there was no export from Belikeri, Karwar, Murmagao and Panaji ports by OMC to GLA. However, the customs house, Kakinada, gave details of export made by OMC to GLA, Dubai. Most exports were originating from Karnataka.
The OMC exported 8,09,299 MTs — excluding exports from Mangalore — to GLA in 2007-08 and 2008-09.
The data obtained from the customs department or ports was taken into consideration for rates, quantity and other factors necessary. The total under invoicing came to $52,341,292 (Rs215,12,50,387).
The face value of the US dollar was taken at the prevailing rate during that time. This under invoicing caused loss to the government from export made to GLA by OMC for two years (2007-08 and 2008-09).
The foreign exchange involved in this case had not come to the Union of India and indicated that the amount might have been salted away in banks in tax heaven countries.
It was, therefore, felt necessary that the competent department should be asked to investigate on where this money was parked.
The government should have earned a sum of Rs2151,250,357 from OMC by way of taxes. Hence, the firm’s evasion of customs duty, income tax and other taxes need to be probed.
The case should be investigated thoroughly and legal action should be initiated against the directors of OMC and GLA in accordance with the law.
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