How did mining baron and former Karnataka tourism minister, Gali Janardhana Reddy, go from pauper, to prince, to prisoner in a little under a decade? After his arrest and remand into judicial custody in September, hitherto unknown details of Reddy’s investments and assets in India and overseas are emerging. The amount of wealth discovered at his palatial home in Bellary alone has baffled onlookers.
The raid teams found gold idols of various Hindu gods, weighing many kilos. They seized several gold necklaces; hundreds of gold bangles, many encrusted with diamonds; several hundred pairs of gold earrings, again studded with diamonds; and over a thousand gold rings, many bejewelled with precious stones. A stash of platinum jewellery that has been unearthed is yet to be inventoried. Gold was also uncovered in the foyers and bathrooms of the Reddy ‘palace’. The number of bank lockers maintained by Reddy, his family and their associates in various banks is mind-boggling. Add to this a fleet of luxurious, custom-made cars and choppers. Not to mention the golden chair—reminiscent of the throne of a former Mysore maharajah—that has his initials GJR inscribed as the coat of arms.
Just how did a collecting agent of a floundering chit fund company come to head one of the richest and most notorious mining firms in the country and amass so much wealth (unofficial figures say he is worth Rs 5,000 crore) in an incredibly short span? There’ve been many renderings of this fairy tale in the recent past, but here is a unique take through the pinhole of Reddy’s income-tax papers and documents accessed by Outlook.
The revelation that Reddy, when filing for an ‘Income-Tax Clearance Certificate’ in Bellary on September 7, 1998, declared that he had not been assessed by the I-T department in the five preceding years, is astounding. At that point, Reddy, all of 31 years, was associated with Ennoble India Savings and Investment Company Ltd. He had joined the company in 1989 as a collecting agent and rose to become its director in 1991. The share capital of the firm for the fiscal year ending March 31, 1997, was Rs 4.35 lakh. By the end of the next financial year, this had risen to Rs 25 lakh.
Between 1991 and 2003, Reddy, a matriculate, promoted more than half-a-dozen firms. Many of these defaulted on the payment of loans to the Karnataka State Financial Corporation between 1998-2003. The loan amounts accumulated to Rs 4.71 crore from Rs 2.80 crore. By March 31, 2003, his net worth was in the red due to the burden of unpaid loans. Reddy was nearly bankrupt. He also had no personal assets except for 10 acres of agricultural land in Bellary district.
Photograph by KPN
What finally turned Janardhana Reddy’s fortunes around was the controversial Obulapuram Mining Company (OMC) that was incorporated in October 2001. The firm had not undertaken any major activity till 2003. However, OMC’s financial statements on March 31, 2004, indicate the following: Rs 28.16 lakh is denoted as cost of land (mine area). The cost of extracting iron ore is listed at Rs 35.50 lakh. The capital of the firm was a mere Rs 10 lakh. And unsecured loans amounted to Rs 5.96 crore. The firm’s turnover that year was Rs 35.52 crore from iron ore sales. A company with an investment of Rs 63.66 lakh had parlayed it into a turnover of Rs 35.52 crore, 58.8 times in terms of investment. His rivals say the returns are unheard of. It’s alleged that the OMC suppressed not only its turnover, but also declared low profits that year by showing inflated mining expenditures. It also paid ‘abnormal’ service charges to M/s Raghavendra Constructions and Ennoble Constructions, in which Reddy and his wife were partners.
The OMC’s robust mining activity coincided with Janardhana Reddy’s brother Karunakara Reddy’s election as MP from Bellary. In 2003-04, the ore extracted was 5,42,050 MT. At Rs 650 per tonne, the turnover was Rs 35.50 crore. This figure jumped manifold in subsequent years. In 2004-05, the turnover was Rs 149.03 crore and in 2005-06, Rs 207.99 crore. These are official figures and Reddy’s rivals say they only tell the ‘partial truth’. They point out that the rate per tonne of iron ore from 2003 to 2006 was cited as Rs 1,100, while the international price of the mineral had gone up to $225 (roughly 10 times that figure).
Cut to Janardhana Reddy’s personal income-tax declarations during these years. As mentioned, his net worth was reduced to the negative as of March 31, 2003, and prior to 1998, he was not even an I-T assessee. But, for the financial year 2003-04, he declared a total income of Rs 12 lakh and a taxable income of Rs 9 lakh. For 2004-05, there is a stupendous jump in total income to Rs 8.38 crore. In 2005-06, this doubled to Rs 17.8 crore. In the same period, there was a simultaneous increase in his moveable and immovable assets. The total value of these assets rose from Rs 32.45 lakh in 2003-04 to Rs 43.52 crore in 2005-06. A similarly mercurial growth can be observed in the total assets of his wife Lakshmi Aruna. Incidentally, Reddy has been charged with grossly under-representing his earnings.
By 2007, he had spread his wings beyond Indian shores. He became a director of the GLA Trading International in Singapore. And his GJR Holdings International Limited was incorporated in the Isle of Man on November 21, 2007. In November 2009, he floated GJR Holdings (Mauritius) Limited and in 2008, he made investments in Dubai and Indonesia.
With the varied assets of the entire Reddy family coming under CBI scrutiny following Janardhana Reddy’s arrest, more dirt is likely to surface in the months to come. The dream run enjoyed by the Bellary brothers appears to be in for a nightmarish conclusion.
Apropos His Barony, Undermined (Oct 10), not a lot of readers will be astounded by this story for except our law enforcement agencies and the judiciary, the loot at the mines, the destruction of vast stretches of land, the links with politicians across party lines, the impunity with which the Reddys operated, was written about and visible to anyone who bothered to look. How was this allowed to go on so long? That is the real scandal.
Santosh John Samuel, Kochi
The Reddy brothers’ story is a classic example of how arrogance combined with stupidity can finish one off quickly. Those who want to be corrupt and get away with it should take lessons from the likes of Sharad Pawar. He is a good example of how one can spirit away wealth for decades and still be above the law.
G. Natrajan, Hyderabad
i dont want say anthing about issue......but in the picture dont have karunakara reddy..in that photo only G Janardhana reddy and one of his brother G Somasheakar reddy.
Although the details of the wealth and the modus operandi are have a surreal feel, i'm sure a lot of readers are not very astounded by this story -- not because we do not believe it to true, but because Bellary and the Reddy brothers have been in the news for close to 10 years! Except our law-enforcement agencies and the judiciary, many people who have followed the news seemed to be aware of the loot at the mines, the destruction of vast stretches of land and natural resources, the links with politicians across party line, the impunity which with this family operated, and so on.
How was this allowed to go on for such a long time? That to us is the real scandal. And much as we gloat over the apparent netting of the Reddys’, the destruction of the lives, land and minerals cannot be measured.
The Reddy Brother's story is a classic example of how arrogance combined with stupidity can finish a person quickly. Those who want to be corrupt and get away with it, should take lessons from the likes of Sharad Pawar. He is a good example of how one can loot away for decades and still evade the law.
The BJP is free of the albatross of the infamy the Reddy brothers have earned. The BJP being a party with a shred of integrity and few of philanthropy, used the brothers to build up its base. It even deferred to them when they tried to run the government, and Sushma Swaraj tried to rock the boat in favour of her Karnataka protege Ananth Kumar. The Reddy brothers then were powerful because the Congress was using its AP gauleiter YSR to cozy up to the Reddy brothers and destabilise the BJP in Karnataka. The Congress being the fount of India's bane - the 3 Cs of Corruption, Casteism, Communalism - tried everything. It used YSR to pull the Reddy brothers out of the BJP depending upon the common caste affilitation of the two. It tried to use the Reddy brothers to kindle the other flame it has used in the past to control Karnataka - that of keeping the Lingayats and Vokkaligas at each others's throats - and offered them the prizee of ruling over Karnataka as the middleman. This is how Urs (and Kuruba) and Hegde (a brahmin) were pitchforked into power, until that strategy unwound and ended with a farce like Dharam Singh. But the BJP instead, decided it would go for broke. It wasn't going to allow the Congress back into Karnataka or allow it to divide the Hindu vote. So it cut loose. First Sushma abandoned the Reddy brothers, simultaneously the BJP across in AP, encouraged Jagan to rebel, promising him the skies through his Karnataka connection, the Reddys. But Jagan ended up inviting the wrath of the Congress, and soon hte CBI itself was after him. And that brought out the humongous scale of loot that YSR lorded over in AP, which you as a "secular" Congress flunkey will never write on. Don't bristle, we know what journos like you are made of. In the meanwhile BSY stepped down only to be replaced by his protege - Vokkaliga! And the BJP carries on, and thanks to shortsighted "advisors" like you the Congress stumbles about in Karnataka while the BJP wins an by-election.
Keep spinning Sugatha, you are entertaining.
Why this writer had no guts to write on the much bigger loot by Rajashekar Reddy ,former CM of Andhra in full collusion with Sonia Gandhi?Janardhan Reddy made the fatal mistake of proclaiming that he would make Thayee(Mother) Sushma Swaraj the prime minister of India.So,Sonia has let loose these CBI hounds against Janardhan Reddy.Sonia's henchman Governor Bhardwaj and the CEC have all ganged up to put Janardhan Reddy in this position leaving aside Congress looters like Anil Lad,Dharam Singh,Goa CM Digambar Kamat and others.CBI is truly Congress Bureau of Investigation which is focussing only on Janardhan Reddy.
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