Interview

'I was given a sweeping mandate to inquire into all aspects of mining illegalities'

N. SANTOSH HEGDE: 'There is popular hatred against miningcompanies. Hence this is a matter that has to be taken to its logicalconclusion.' Photo: K. Gopinathan   | Photo Credit: K_GOPINATHAN

Upton Sinclair's powerful 1906 novel The Jungle , which documented the oppressive working conditions and appalling corruption in the meat packing industry in Chicago, ultimately forced major regulatory changes in food safety by President Roosevelt's administration. While it is too early to say whether the 2011 report by former Karnataka Lokayukta N. Santosh Hegde on illegal mining in Karnataka will have the same impact on the way the industry operates in the State — and elsewhere in the country — the 26,000 page document is possibly the most exhaustive, carefully-researched investigation into corruption and its linkages with industry and politics that has been compiled in India.

A recent judgment by a division bench of the Karnataka High Court on a petition by former Chief Minister B.S. Yeddyurappa challenging the First Information Report filed against him by the Lokayukta police has been widely viewed as a setback to the legal fight against corruption.

In an interview with Parvathi Menon, Justice Hegde answers questions on the judgment and its likely implications. Excerpts.

What is your response to the recent judgment of the Karnataka High Court that has quashed the First Information Report filed by the Lokayukta police based on the findings of your report on illegal mining? The judgment has also quashed Chapter 22 of your report that deals with circumstances in which alleged payments were made by a private mining company to a trust run by members of former Chief Minister B.S. Yeddyurappa's family.

Has this judgment been a setback to the investigation into illegal mining and the findings of your report?

I am aware of the fact that I cannot denigrate the judgment as that would be contempt of court, but fair criticism is not contempt of court.

Let me analyse the judgment. A factor held against me is that I have violated the principles of natural justice because I did not issue a notice to the former Chief Minister B.S. Yeddyurappa and allow him to depose during my investigations into illegal mining.

I relied on a judgment of the Karnataka High Court ( Dr. K Chowdappa vs. State of Karnataka, I.L.R. 1990) which examined the provisions of Section 7(2A) and Section 9 of the Karnataka Lokayukta Act, 1984.

The 1990 Judgment specifically states that there are two types of enquiries entrusted to the Lokayukta. Under Section 9, any citizen can file a complaint to the Lokayukta, and you have to give notice to the respondent as there is a respondent in that complaint. The second is under Section 7 (2A). Here the case is referred to the Lokayukta or Upalokayukta by the State government. Under Section 7 (2A), you do not need to give notice to the respondent — and there may or may not be a respondent.

Take the present case. The reference is made to the state of illegal mining in Karnataka in the districts of Tumkur, Chitradurga and Bellary, and there is no respondent as such. During the course of the investigation we may find certain irregularities committed by an officer, a politician, a company or anybody — the terms of reference are wide.

The 1990 Judgment states: “Thus, when a case is referred to Lokayukta or Upalokayukta by the state government, the Lokayukta or Upalokayukta is not required to follow the procedure laid down in sub-section (3) of Section 9 of the Act.”

The judgment also states that “mere preliminary inquiry is not a bar to holding further inquiry by government.” I held a preliminary inquiry and told the government what I had found. As there was evidence of criminal misconduct, I said that they take action under the relevant criminal law.

I think it also stands to logic that in a massive inquiry like this, if we had given notices to all the persons concerned, it would have taken about 25 years to do so. But this is only a buttressing argument. Merely because of the time taken, ipso facto it does not mean that notice should not be given. This interpretation of the Act is by a High Court, which judgment is binding on me as a Lokayukta. I have followed that.

The High Court Judgment also states that no material has been produced in the report to prove that any favour has been committed by the petitioner, B.S. Yeddyurappa, to these companies.

There are two parts to corruption. The first is receiving illegal gratification, and the second showing official favour. My experience in corruption is that nobody shows official favour before getting a bribe — they first get the money then do the favour.

In this case, it became difficult or impossible for the petitioner in the writ petition to show favour as there was a stay order on mining leases. But according to me, he received an illegal gratification to show an official favour.

My question is this. When a Chief Minister's family receives such enormous sums as Rs.30 crore, should it not be further investigated? Please see the recommendation in my report at the end of Chapter 22. I ask for an appropriate authority to investigate. At the stage of investigation he will get an opportunity to be heard. No police officer will go and ask the accused to depose before registering an FIR.

The judgment states that Chapter 22 of your report “has no connection with illegalities/irregularities in the mining [sic],” and goes on to say that your report is not within the scope of reference made to it by the Government.

I was given a sweeping mandate to inquire into all aspects of mining illegalities. Corruption in mining is also within its scope.

In Chapter 22 of my report, I had said that Rs.10 crore was paid by South West Mining Company Ltd (SWMC), a front company for JSW Steel Ltd (that has another sister concern called Jindal Vijaynagar Steel Ltd) to the Prerana Trust, owned by the family members of the then Chief Minister.

The company, along with two sister companies, had applied for mining leases. It had no money and therefore borrowed from its “parent” company, if I can call it that. In the normal course, the money should have been transferred directly to the SWMC, but that did not happen because the donor wanted to keep his identity secret. Therefore it was paid in a circuitous manner to the SWMC. We have documents to show the payment by SWMC of Rs.10 crore to the Prerana Trust.

The question is — why should this mining company give a donation when its application for a mining lease is still pending? Prerana Trust is in Shimoga district. It does not run any institution in Toranagallu or Bellary where the company is situated. It does not offer any benefits to its workmen or their children who might have got the benefit of a good education in an institution run by the Trust. There are many educational trusts running in Karnataka — why do they choose the Prerana Trust to give a donation? That is one aspect.

Further, this company was running its day-to-day business on overdraft. Have we ever heard of somebody borrowing Rs.10 crore and then donating it? The guidance value of the land at the relevant point of time was Rs.1 crore, but was purchased by the very same company for Rs.20 crore.

The judgment states that when the companies applied for the three mining leases, Mr. Yeddyurappa was neither Chief Minister nor Mining Minister. Were the mining leases pending or had they been approved by the State government?

The State government had sent the applications to the Central government, and the Central government in turn asked the State government for its comments. At this stage there was a stay from the High Court.

What are the implications of the judgment?

You must have read that the Lokayukta police are not filing an appeal against it in the Supreme Court. However, I read that one of the Upalokayuktas is ready to go on appeal. If that does not happen, this case will go uninvestigated.

Can the Supreme Court intervene?

If there is an appeal by an aggrieved party, yes. But the big question is, will there be an appeal.

What kind of resources did it take to compile the report?

The second report was 26,000 pages. My officers collated 40 lakh bank accounts. The necessity arose because of the mafia-like activities of a “Bellary group.” If you had to transport one ounce of legitimately mined ore, you had to give 45-50 per cent of either the money value or the quantity to them. This money would be credited in some innocuous person's bank account, and then transferred from that account to another account. Ultimately it gets parked in a VIP's account. To trace the money trail just five officers collated these accounts. The amount involved runs to hundreds of crores.

So do you believe there is hope that justice will be done?

The environment has changed, and there is hope. That apart, the Supreme Court of India has appointed a Central Empowered Committee which has been directed to investigate into any payments that might have been made to the then Chief Minister by two of the companies mentioned in my report. According to media reports, the CEC has given notice for appearance to the parties concerned on March 20. I am confident the investigation will be positive.

The issue is now in the public domain. There is popular hatred against mining companies. Hence this is a matter that has to be taken to its logical conclusion.


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