Mining scams in India

Mining scam in India (colloquially Indian mining scam) is a series of widespread scams in various ore-rich states of India, and has generated controversy, which spans encroachment of forest areas, underpayment of government royalties, conflict with tribals regarding land-rights. The spill-over of the effects of legal mining into problems such as Naxalism and the distortion of Indian democracy by mixed political and mining interests, has gained international attention.

The latest scam that has come out is the Coal Mining Scam in which Government has had a presumable conservative loss Rs1.86 trillion (short scale), due to the delayed implementation of competitive bidding process for allotment of coal blocks, says the CAG.

Rising global iron-ore prices driven by Chinese demand brought focus to the iron ore rich Bellary region of Karnataka. This iron ore is alleged to have been illegally mined after paying a minuscule royalty to the government. The major regularities involve mines in Bellary, including those of Obulapuram Mining Company owned by G. Karunakara Reddy and G. Janardhana Reddy who were ministers in the Government of Karnataka at the time.

Income tax sleuths unearthed under-invoicing and tax evasion of around Rs 86 crore by the Obulapuram Mining Company (OMC), run by Karnataka's Reddy brothers and also their trusted confidante and state health minister B Sriramulu. A team headed by the Additional Commissioner of Income Tax raided the premises of over 10 people, the team consisted of around 150 Income tax Investigation officials and companies of Central Reserve Police Force conducted raids. Income tax officials described it as one of the biggest IT raids in the recent history. The investigation found massive tax evasion and money laundering which prompted mass panic amongst the then BJP government in Karnataka.Officials found that the one-dollar company, GLA Trading International (GLATI), was established on November 30, 2007, with Janardhana Reddy as one of its directors. GLA, presumed to be named after Janardhana Reddy's wife Gali Laxmi Aruna, has offices in Singapore, Dubai and the British Virgin Islands, which is a `tax haven'. The investigation report held that "OMC's transactions through the MoU with GLATI are convoluted and devised to evade tax payment in India," A comparative study of shipping bills for export with other companies, which are exporting the same grade material, confirmed the malpractice by OMC. According to the report, OMC signed the MoU with GLATI to sell iron ore only to evade tax payment in India. When the Commissioner summoned Janardhana Reddy and sought explanation from OMC, the Reddys claimed it suppressed sales for developing stronger relationship worldwide with global buyers through GLATI for financial stability against price fluctuations. This report was billed as the best investigation of the year and recorded in the book Let us Share by the Finance Ministry. This report was the basis of the Central Bureau of Investigation investigation and the Santhosh Hegde Report.

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