Where has all the Bellary ore money gone? Swiss banks or the tax haven of the British Virgin Islands? The final report on illegal mining illustrates that Karnataka's powerful Bellary ministers, whose transactions were way beyond what is declared to the state authorities, are involved in money laundering and tax evasion to smuggle out their crores - similar to what former Jharkhand CM Madhu Koda was up to some time ago.
The Lokayukta report has assessed that a whopping Rs 215.12 crore has been parked by Reddy brothers and their confidant B Sriramulu in tax havens and recommended for a thorough investigation by IT department to ascertain the exact loss and bring the money back to India.
Officials led by UV Singh have unearthed vital evidence that suggested that Reddys had allegedly diverted funds to overseas destinations through illegal means from their Obulapuram Mining Company (OMC).
The report said the OMC had exported about 20 consignments to GLA Trading International in Singapore, though the major destination for iron ore trade is China. Incidentally, officials found that GLA was established on November 30, 2007, with G Janardhana Reddy as one of its directors. GLA, with a share capital of $1, has its offices in the tax havens of Singapore, Dubai and the British Virgin Islands.
A comparative statement of various iron-ore exporters for the similar grade of iron ore revealed that OMC has exported to its own Singapore entity for a much lower price. "The export consignments were highly undervalued - by 35% - which amounts to smuggling in the light of provisions of the Customs Act."
A telling example in transactions from the export of OMC was in Feb-March 2007 from Visakhapatnam. For the similar grade of iron ore, OMC had under-invoiced at $94 per tonne, while it exported it to GLA in Singapore; GLA, in turn, sold it to the top grain minerals, Maco Commercial, at $152 per tonne - a clear difference of $58 per tonne.
The report said there are 478 suspected cases of under-invoiced exports during the period 2006-2010 amounting to over Rs 2,222 crore.