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Updated: June 18, 2013 12:47 IST

Karnataka lost Rs 1 lakh cr from 2006-2010

Sudipto Mondal
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Lorries carried at least 14 crore tonnes of ore out of Bellary by road in the nine months between September 2009 and June 2010.
The Hindu Lorries carried at least 14 crore tonnes of ore out of Bellary by road in the nine months between September 2009 and June 2010.

The epic proportions of the illegal mining scam that was uncovered by the Karnataka Lokayukta in its 2011 report may actually have been just one act of a much larger, more complex and multi-layered drama.

There is now new evidence to suggest that the Lokayukta’s final report on illegal mining – a political game-changer that sent the powerful to jail and catalysed a regime change in the state – is just one part of the mining story. A six-month-long investigation by The Hindu, with help from whistleblowers in the Railways, the Karnataka Commercial Taxes Department and the CBI, points to losses to the State exchequer between January 2006 and December 2010 that are, at the very least, Rs. 1 lakh crore or eight times the estimated figure given in the Lokayukta report. The investigation also shows that the State lost Rs. 2,000 crore in commercial taxes.

The new information suggests that the dominant narrative on illegal mining, namely, that illegal ore was mainly exported to China to feed an infrastructure boom triggered by the Beijing Olympics, is actually a very partial telling of the mining scam story. The new data with The Hindu furthers the depth and reach of the mining scam, a part of which was so exhaustively covered in the Lokayukta report.

Some our central findings are as follows.

The Lokayukta report says that 12.57 crore tonnes of iron ore was exported overseas from Karnataka between 2006 and 2010. However, documents with The Hindu reveal that nearly 35 crore tonnes of ore was transported out of Bellary in the same period. If one were to deduct the 12.57 crore tonnes exported (as per Lokayukta report), the remaining the 22.43 crore tonnes was sold in the domestic market.

The Lokayukta report estimates the losses to the exchequer at Rs. 12,228 crore. The organisation’s calculation was based on the fact that the government had given permits for extraction for only 9.58 crores tonnes of ore. Subtracted from the 12.57 crore tonnes exported, it meant that 2.98 crore tonnes of ore was illegally mined and exported. The Lokayukta estimated the price of ore exported at an average of Rs. 4,103 per tonne.

What explains the divergence between the findings of the Lokayukta and those of The Hindu? The Lokayukta has relied on Customs Department data on ore shipments exported from 10 ports in Karnataka, Goa, Tamil Nadu and Andhra Pradesh between 2006 and 2010, to calculate the quantum of ore that left the country.

By contrast, The Hindu has looked at the total quantity of ore transported out of Bellary by road and rail. Railway documents show that 20 crore tonnes of iron ore was transported out of Bellary from six railway stations and 14 railway sidings between 2006 and 2010. Of this, nearly 19 crore tonnes of ore was marked “for export”.

From data sources in the CBI and Commercial Taxes Department, we know that lorries carried at least 14 crore tonnes of ore out of Bellary by road in the nine months between September 2009 and June 2010. “This was when the Bellary [Reddy] brothers had rebelled against B.S. Yeddyurappa’s government. The rebellion was a smokescreen to intensify illegal mining. At least 20,000 trucks were leaving Bellary each day in that period,” a CBI official told The Hindu.

Leaving out these nine months, on each day between 2006 and 2010 an average of 1,000 lorries left Bellary, with an average load of 32 tonnes of ore per truck. This adds nearly another 4 crore tonnes to the overall tally.

Therefore nearly 35 crore tonnes of iron ore was transported from Bellary in four years time by lorries and railway wagons.

Officers in the Commercial Taxes Department and the CBI concur on the point that 35 crore tonnes of ore could not have been exported from the ports near Bellary. “All the 10 ports [from where stolen ore was being exported] put together simply don’t have the capacity to handle such massive traffic,” said one Commercial Taxes officer.

These sources agree with the Lokayukta report to the extent that only 12.57 tonnes was actually exported. “On this count, the Lokayukta report is accurate as it is Customs Department data on which the report is based,” said an officer.

However, the remaining 22.43 crore tonnes of ore, although marked “for export”, was supplied domestically, he says. This, the officer claims, was done to evade commercial taxes.

More In: Karnataka | National

And this time, this is no presumptive loss. This is the physical loss.

from:  Priyabrata
Posted on: Jun 18, 2013 at 09:02 IST

Effort made by the Hindu to find out the irregularities in the ore mining and resultant loss in the state commercial taxes in Karnataka is laudable. The total quantity of ore which was sold in the open market necessarily attracts states’ commercial taxes. However the huge sale of ore in the market should have got attention of the state commercial tax department. Evasion of payment of taxes on this huge amount of extracted ore was possible only for negligence of the state commercial tax department. Still, tax department can verify the entire sales and find out the sellers of the same and realize due taxes on the value of the ore sold

from:  MAHESWAR DEKA
Posted on: Jun 17, 2013 at 23:44 IST

Being a mining man and involved in mining activities for the past 30 years, I fully agree with
the report. it is really good job done by The Hindu Team. Not only China got Iron ore at a
cheaper rate equally destroyed the administrative structure, everybody became corrupt.Mine
owners earned crores. Poor India became more Poor.

from:  S A Dwarakanatha
Posted on: Jun 17, 2013 at 20:34 IST

Good R & D done, good analytic report,expecting a result/outcome......to
appreciate the effort taken for the report....yes...Guilty should be
punished and should recover the entire amount lost!!

from:  Girija
Posted on: Jun 17, 2013 at 17:14 IST

Many have missed a point . As per Hindu calculation nearly 25 million
tonnes steel was produced with the illegal ore.(350 million in 6 years
or 60 million per year less export is 40 million illegally used per year
If it be so have our Excise and other govt depts connected to steel
industry, where hand in glove with mining lobby and earned their share.
How is it possible 25 million tonnes of unaccounted steel and market.
Please do a proper home work . Is this confined only to karnataka
The figures appear to be bloated

from:  salam
Posted on: Jun 17, 2013 at 16:06 IST

Very Good Report by Hindu , expecting more of these especially on
Mr.Y.S Jagan Mohan Reddy.

from:  Midhun
Posted on: Jun 17, 2013 at 15:09 IST

what is reported by Hindu is correct, BJP has much to explain. It has
now become a party with dissidence and not with any difference.

from:  Sreedharan K. N.
Posted on: Jun 17, 2013 at 13:58 IST

Well done The Hindu. Great work. Great to see these kind of journalism
still in this era, where ppl do what every it take for a bit of money.
Hope this is just a start and we can see some productive results and ppl
will get some of that money back to government.

from:  naveen
Posted on: Jun 17, 2013 at 13:55 IST

To whom?
Concern authority.. pl recover .. its public money

from:  vishal
Posted on: Jun 17, 2013 at 13:45 IST

Hindu can voluntarily become part of RTI so set a trend. Is the editor listening.

from:  desikachar
Posted on: Jun 17, 2013 at 13:43 IST

Your report can be based on hunches your deductions etc but Lokayukta
needs to substantiate
You have calculated nearly 60 million per annum or 150000 t or 5300
truck loads @30 tper truck
If a major portion is by local mills then they need top have suporting
documents for source of ore for the steel produced by them At a
consumption of 1.6t of ore per tonne of steel 22 crore works out to 14
crore or 140 million tonnes of steel or nearly 25 million tonnes of
unaccounted steel
Is this correct

from:  salam
Posted on: Jun 17, 2013 at 13:40 IST

First of all, kudos to The Hindu and its team for the comprehensive
analysis. The mind boggling amount which Karnataka has lost is almost
equal to Andhra Pradesh’s one year budget. Think how many people can
survive and how much palpable development can a government do in a year.
I wonder how people still vote parties whose founders are blotted
indelibly with corruption charges. Only an investigation without any
political influence can put the culprits behind the bars but it is
nowhere near to happen!

from:  koundinya
Posted on: Jun 17, 2013 at 13:40 IST

Great work by "THE HINDU'. Great research, best reporting (proper stats) without sensationalism, without twisting. Just simple reporting with facts.

from:  Deepak Kumar
Posted on: Jun 17, 2013 at 13:38 IST

Lorries which was carrying mines and plying between karwar and mangalore port causing thousands of death in accidents , many innocent loss their precious lives. Since I live in coastal Karnataka I know the fact.
its true that many people got benefitted from this mining and earn crores of money, specially people of Karnataka become prosperous and wealthy. But due to government weak policy all such things happened.

from:  Sayyed
Posted on: Jun 17, 2013 at 13:37 IST

Recover the money from the scamsters, let it be the first such case where we attach such properties of the scamsters first.

from:  Kartik
Posted on: Jun 17, 2013 at 13:36 IST


When it comes to corruption, there is no difference of Jayalalithaaas and Karunanidhis. What do we do with the post morten? Is it possible to have a system which will not allow such acts of ommission and commission? How many years do these corruption cases run in the courts? I am not seeing any light in our political system.

from:  A.RAJAMOHAN
Posted on: Jun 17, 2013 at 13:03 IST

Hey! What a callous Govt and Loot mentality politicians in our country!
True indeed by contrast British took away much less of our money and
resources ! Churchill proved right we have ONLY scoundrels in our midst
and less of dedicated folks for serving people; we all know how money is
spent to "buy" votes in elections, most of it unaccounted. Pity - pray
for better sense of duty and patriotism in coming generations !

from:  Rita Jaisingh
Posted on: Jun 17, 2013 at 12:44 IST

media is the only agency operating properly. looting natural resources clinically without any hassles /hindrance is the true face of our massive corruption system without laws /rules .when this will it end???if the system not able to stop this loot?don"t tax public /aam aadmi pl

from:  raj
Posted on: Jun 17, 2013 at 12:38 IST

Commendable report by Sudipto Mondal/The Hindu. The report helps the
readers to understand the complex connive of the scamsters, and the
lacunas and shortcomings of the investigating agencies as well. At least
now the Government should nationalize the mining activity in order to save
the natural resources and the state exchequer.

from:  Isthiyakh
Posted on: Jun 17, 2013 at 12:34 IST

the hindu has done very tremendous job.my heartly congratulations to the hindu.
In india all political parties are sick of corruptions and being addicted to that.
they all are same and they are not going to do anything apart from their sickness.

from:  JYOTI
Posted on: Jun 17, 2013 at 12:22 IST

Biggest problem I feel for all these loots that we never able to recover money from the culprits. Be it Raja or Reddy or even Coal Block scams. They go to jail and thats it. Where the money gone and why there is conscious effort on bringing back those ill gotten money from these corruption scandal.

from:  Sanjay Barnwal
Posted on: Jun 17, 2013 at 12:11 IST

Thank you, The Hindu, for the findings.

from:  Vinay
Posted on: Jun 17, 2013 at 12:07 IST

This is a loss of public money, all responsible individuals/institutions should be punished and amount should be recovered by auctioning their personal/institution properties.
There should be justice, then only public feels rule of law works and there will be more law abiding people..

from:  Deshpande
Posted on: Jun 17, 2013 at 12:05 IST

Good comprehensive reporting by the writer. I wonder if any of the implicated will publish a rejoinder saying, "it was not that much, but only this much smaller amount that was swindled.". Waiting for it.

from:  ashokr
Posted on: Jun 17, 2013 at 11:45 IST

When we claim that we have technologies to trace Indian bustard ,India
is also able funnel out crores of tonnes of Iron ore under its
nose,non payment of taxes by reliance to the tune of 3500 crores
vodofone to the tune of 13000 crores,etc why our finance minister is
not stopping the business activity of these companies as an immediate
corrective action and plugging the hole of Indian economy.By the time
any action is taken India will be 90% empty.Before it was british who
did this and in the so called huge democracy were the britishers were
replaced by few elected people and these people are busy making policy
for making funnels.

from:  kousikan
Posted on: Jun 17, 2013 at 11:26 IST

This report should be an eye opener for everyone who thinks one
particular party is corrupt and other is a messiah. Between 2006-2010
BJP was a part of government one way or another. Problem of corruption
is systemic. Kudos to The Hindu for their investigation.

from:  Ananth
Posted on: Jun 17, 2013 at 11:19 IST

Great work !!!!!!!!!!!

from:  Theepak
Posted on: Jun 17, 2013 at 11:16 IST

Thanks for a beautiful and comprehensive report. Hope the Supreme Court
takes cognisance of this report -- the fact that 20,000 lorries per day
were able to move freely in a country which says it has rule of law is
a complete shaming factor. I wonder how many times the Reddy brothers
should be hanged for day-light robbery of national wealth.

from:  Yashwanth P
Posted on: Jun 17, 2013 at 11:00 IST

about the export figures:
1. its a regular practice for the ship to carry more cargo than what 'bill of lading' suggests. Also, since these ships were moving between china and india, there could have been an arrangement where ships with faulty bill of lading and spurious insurance papers were allowed (lots of ships dealt with private ports in india).
2. the capacity of the port depends on the rate at which they can handle cargo and the amount of time they operate. usually shipping ports (mostly private ports) can handle cargo at a rate which is twice as much as they claim they can. Ports do this because they have to give a commitment on the loading/discharging time for every ship. When the work is done quicker, they get payed extra. so, the capacity reported as official figures would be a little over half the real capacity of these ports.
to really get to the bottom of this, some more digging is required with the shipping companies involved and the equipment used at ports.

from:  ram
Posted on: Jun 17, 2013 at 10:36 IST

The Hindu is doing a great service for the country in exposing this massive scam. I hope The Hindu and other media keep a close watch on corruption in India and help expose the crooks. India needs to implement capital punishment for crime especially for politicians in powerful positions. Also, why not the CBI conduct an investigation of the total assets of all the politicians and people with assets over Rs. 10 crores to determine if their wealth had been acquired by legal means? Once that it done, the CBI can go after people with Rs. 2 to 10 crores in assets.

from:  Balasubramanian
Posted on: Jun 17, 2013 at 10:08 IST

Sounds scary. Even if we start thinking "Gone-is-Gone" way, we can utmost send these corrupt politicians into the dungeon. Noting the amount of discussion, that went through for executing Kasab and two others, it is next to impossible for us to hang the guilty.
But I am sure neither the facts, nor the corrupt can answer the question "Can we bring back the hills that once stood high in Bellary?". It is time for people to act and stop corruption.

from:  Jayanth
Posted on: Jun 17, 2013 at 09:58 IST

Most excellent audit work, The Hindu. Do persist and cover as many areas as
non BJP governances, corporates, other bodies
such as IPL, individuals also in your unique way.

from:  Soundararajan Srinivasa
Posted on: Jun 17, 2013 at 09:47 IST
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