 Hello and welcome to NewsClick. We are talking today about the story in Karnataka with the iron ore mining, the Lokayukta report and finally the exit of the Reddy brothers from the ministry in Karnataka. To discuss these we have with us today Paranjay Guha Thakurtha, independent journalist and maker of a documentary film on this story called Blood and Iron. Welcome to NewsClick. Thank you Raghu. Let me start by asking you what you think is the outcome now of the exit of the Reddy brothers and what do you see happening in Karnataka over the next few weeks or months. That's a difficult question to answer but I think what is most significant is that following the submission of the final report of the former Lokayukta Justice Santosh Hegde, the fact that B.S. Yadu Rappa had to put in his papers, most reluctantly. He quit his job literally kicking and screaming. This itself is very, very significant and the fact is he was after all the first chief minister of a state in southern India who belonged to the Bharati Janta Party. That he had to quit his job just a little over three years into his five-year term is very, very significant. Also significant is the fact that his successor has chosen not to include two of the Reddy brothers and their close associate B. Sriramulu in his cabinet is also very, very significant. I think what is noteworthy about Justice Santosh Hegde's voluminous report is that he is meticulously documented the manner in which the chief minister's own family members, his sons, trusts and companies controlled by them were the recipients of large amounts of money or 30 crore rupees, 20 crore to one so-called educational trust and 10 crores in a land deal. And these involved some of the companies against whom there were serious allegations of illegal mining and the fact that this nexus between criminals, politicians and businessmen was established in the report. I think these are some of the most significant aspects of the report and in passing I may also add what Justice Hegde's report also nails is the lie that was propagated by Gali Janathan Reddy, the former union minister for tourism infrastructure development and youth affairs in the Karnataka government that he and his family members had really nothing to do with illegal mining in Karnataka and all their interests were in the neighboring state of Andhra Pradesh. Not only has he sought to nail that claim, he's also documented how money went from one company to the other company through Singapore to international tax havens and how this was part of a money laundering racket and in light of this detailed documentation contained in the Ombudsman's report, are we likely now to see an unfolding of the next chapter which will be filing of charges, prosecution? Justice Santosh Hegde's successor, Justice Sivraj Patil has already initiated the process and one can hope that the entire process from the first, the filing of a first information report to the carrying out of an independent investigation which should be followed by prosecution proceedings. I hope, I hope, I'm not sure but I hope all these will proceed in the coming years. You know, for some months now there was this face-off between the governor of Karnataka Hans Raj Bhardwaj and Mr. Yadu Rappa and at that point of time the BJP was alleging that Hans Raj Bhardwaj was acting more as a quote-unquote Congress agent rather than a constitutional functionary as a governor but now that Mr. Yadu Rappa is just one more member of the Legislative Assembly, the permission of the governor need not be obtained to commence prosecution proceedings against him. I hope this happens in the near future. I'd like to take a step backwards at the bigger picture involved. Clearly this is not a matter confined to the state of Karnataka alone. Even if we look at the story of the Reddy brothers and their mining operations in Bellary, Bellary as we all know is a region divided between Karnataka and Andhra and their mining operations also were divided between Karnataka and Andhra and there's at least as much of the iceberg on the other side of the border in Andhra as there is in Karnataka and that's a story which I believe is yet to unfold. Yes, you are absolutely correct. You know, for some years now what has been going on in not just Bellary but it's a joining district which is the district of Anantapur in Andhra Pradesh was known. In fact, Justice Hegde's first report had documented how the miners had virtually obliterated the provincial borders, the markers which demarcated the borders between Karnataka and Andhra Pradesh in their greed to mine and encroach on the leases of others. So what was interesting are two or three things. What has been going on there has been meticulously documented. It's the Union Ministry of Mines. It's the regulator, the Indian Bureau of Mines which has said that over 90% of the mining operations in that part of the country were illegal. They were violating some law or the other encroachment or you know, extracting more than what they were authorized to do and so on and so forth. But wait, I think it goes beyond that. Bellary is incidentally a Telugu dominated, the Telugu speaking population of Bellary is substantial and the Gali Reddy brothers had a very, very close business association with the former Chief Minister of Andhra Pradesh, Y.S. Rajshekhar Reddy as well as his son, Y.S. Jagan Mohan Reddy, the member of parliament from Kadapa Lok, Lok Sabha constituency, who if you go by his declared assets is the wealthiest member of parliament at present. So when the Gali Reddy brothers set up the Obalapura Mining Company and Brahmani Steals and other companies, there are photographs galore of showing them with Y.S.R. So the short point is that the loot, the illegal mining and the illegal exports of iron ore from this part of the country which often is euphemistically described as the new Republic of Bellary has covertly contributed to the coffers of the two largest political parties in the country, the Bharti Janta Party and the Indian National Congress. It also shows the picture of the involvement of the ruling sections in India. Whichever political party they belong to in the new dispensation with extractive industries, be they mining or oil or gas or whatever seems to be the quickest way to make money and where the nexus between politicians, the bureaucrats and business seem to come out. You know, let me answer your question in more than one way. You talked about the quickest way to make money. This has been documented. The Gali Reddy brothers were the sons of a police constable from Kaul Bazaar in Bellary. Yed Yoruba started his career as a clerk in the government department and then went on to become a clerk of a rice mill owner whose daughter he married and set up a hardware store. Thereafter, these two individuals, the kind of wealth they accumulated is truly mind boggling. How did they accumulate this wealth is an obvious question that everybody is asking. These are surely a wealth that is way, way disproportionate to their own sources of income. But when you look at a bigger picture at one point of time, not only were the mining activities closely controlled by the government, the government was itself doing all the mining. But as over the last 20 years, as more and more of these mining leases were given to private mine owners and during this entire period of so-called economic liberalization, what we see is the other face of it, the ugly face of it, the absence of regulation resulting in these forms of crony capitalism. Justice Hedde's report clearly points out how Bellari became like the fiefdom of these individuals, not only were they state ministers in charge, they ensure that no honest officer, whether that officer being the forest department or the police department or in the administrative service could exist there for any period of time unless they sort of went over backwards to go along with the ready brothers. And you know once upon a time it was really Bellari used to be a bastion of the Congress. This was from where Sonia Gandhi was elected and this was from where Sushma Swaraj contested against Sonia Gandhi. That was the first time the Bellari brothers, the Gali Reddy brothers came into contact with her. But today of course all their mentors have deserted them including Mrs. Sushma Swaraj who happens to be the leader of the opposition in the Lok Sabha. Now under the present neoliberal dispensation, the argument was that neoliberalism liberalization would bring to an end the license permit Raj, a collusion between bureaucracy and politicians on the one hand and business people on the other. But we see that collusion continuing even under liberalism albeit in different forms. In fact what you see is a situation which is far worse than the situation that prevailed in the license control Raj days. Yes things were not exactly great those days but what we see is a kind of blatant violation of all the laws of the land. A complete brazenness in manipulating the law. I mean for instance Justice Hedde's report talked about 500,000 tons of iron ore which was seized and suddenly disappears. We're talking about huge amounts of iron ore being exported out of the country much of it to China with no rules being followed whether the manner in which trucks were overloaded and the manner in which the customs duty norms and the port rules were violated and this is not the only cost. The cost has been huge to the ordinary people of that area. Their environment has been ravaged, their livelihoods have been destroyed, their water has been polluted, their air has been polluted and if you really go to that part of the country you'll realize that it is really it appears as if it's some other planet. What was once verdant green forests looked literally like creators from some other part of the some other planet. Extractive industries seem to be the cutting edge of the neoliberal set of policies as well as the cutting edge of environmental destruction both in terms of human ecology as well as in terms of the natural environment. I just like to end with a last point which is we've seen the scams unfolding on the big giving away of natural resources oil, gas, spectrum. The mining sector seems to be ripe for the smaller players to emerge as bigger players in due course of time. You see state after state in coal, in iron, in marble, in quarrying how this kind of thing is being done. Is this the last frontier now? You know Raghu in a sense in certain respects things are even worse than you make it out to be. What has happened is that the natural the most valuable natural resources that lie under Mother Earth in this country at least also happened to be those areas where above Mother Earth some of the most biodiverse parts of the country and these are also those parts of the country where some of the poorest of the poor especially the indigenous communities, the tribal people, they reside. Now what has happened is this kind of last frontier what economists sometimes describe as the resource curse the presence of resources instead of being a blessing for the local communities end up becoming a curse on them and what has happened is that the government which is supposed to act as a custodian of resources that belong to the people of this country, they start playing favorite they don't allocate these resources in a fair and a transparent manner and therefore you see the worst forms of crony capitalism and I mean this is in certain senses even worse than feudalism or colonial rule that the kind of thing you saw because you have resources here say in Biladi, non-renewable resources which have gone for good. In certain respects it's worse than the 2G scam in the case of the 2G scam the losses are huge but they are notional money which the government could have got but did not get in this case those resources will never come back to this country those I know reserves that existed in this country they are now steel rods and steel bars and parts of buildings and then stadia in Beijing or some other part of China so in that sense those resources have gone forever. Thank you for your time. I am sure we could have continued the discussion on many other linked issues but thanks again. Thank you very much for asking me to be here.