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LATEST NEWS UPDATES | The road to reforming Karnataka's mine mafia by Karthik Subbaraman & Meera Mohanty

The road to reforming Karnataka's mine mafia by Karthik Subbaraman & Meera Mohanty

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published Published on Jul 31, 2011   modified Modified on Jul 31, 2011

After sliding a mile backward into a morass, Karnataka'smining sector has just been shoved a metre forward. Since it has taken an almighty effort by the judiciary and a quasi-judicial body, the Lokayukta, to accomplish even this much, what hope is there for a sector that is vital for Karnataka's and India'sindustrial development?? Will the sector - represented by mining firms, traders, transporters, government agencies - slide back deep into the sodden mess or can it free itself?

On the evidence so far, it seems the judiciary still has its task cut out. Particularly because many in the legislature and executive, especially the political class, are part of the problem. In fact, some politicians belong to whatLokayukta Santosh Hegde describes as a 'mafia' that has controlled much of the iron ore mining industry and run Bellary district with an iron fist.

Even so, the Supreme Court's order suspending all mining activity in Bellary has come as a surprise. Earlier in the month, the court had asked if such a step might not be warranted, perhaps hinting at what was to come, but it had also asked Karnataka in April to allow export of iron ore.

What could explain the new hardline stand is that the court has come to a conclusion that the government is too deeply compromised to be able to implement a workable solution. Moreover, accepting the new normal after years of plunder and moving on may just not be acceptable.

"Extreme situations demand extreme measures," says Sangayya Hiremath, whose NGO took the illegal mining fight to the Supreme Court. "The custodians of rules and regulations have become partners in crime. We need governance first, mining second," he says.

Long Overdue?

The court suspended mining after it was advised by a panel of experts that the Bellary forest area had been almost totally denuded in the headlong rush to mine iron ore. Its order came a day after Hegde's report on illegal mining that severely indicted several politicians, including chief minister BS Yeddyurappa, and hundreds of officials.

Just a day before the Supreme Court's order, many iron ore miners who claim to have been doing business with honour for decades said that the day was not far off when they could resume mining without fear from the Reddy overlords of Bellary. Janardhan Reddy, his elder sibling Karunakara and their close associate B Sriramulu, all of whom are ministers, were spent forces, they surmised: the financial clout of the Reddys had been severely weakened by mining bans in leases controlled by them and the Lokayukta had damaged their political standing. As far as they are concerned, the mining scandal in Karnataka began with the Reddy brothers and ends with them: if the Reddys are not able to influence the administration, rule of law prevails automatically.

But the Supreme Court, apparently, was not so sanguine. And neither is Harish Salve, a senior advocate in the court. Earlier this year, he recused himself as amicus curiae (adviser to the court) in environment matters after he represented mining firms indicted by the court's Central Empowered Committee tasked with finding out the extent of illegal mining. "I am sceptical. One Yeddyurappa goes, another ten will come," Salve says.

But not even a sceptic like Salve sees a ban as a solution. According to him, all the leases where encroachments or violations have happened should have been cancelled. "There will be 50 if not 500 for every lease cancelled."

A Few Bad Apples

The miners who are so gleeful about the downfall of the Reddys were also thinking likewise. Their logic was that since they had not acted illegally, their mining licences would continue. Only those mine-owners who violated the law would have their licences cancelled. And there were dozens of them who would meet that fate based on the recommendations of the Supreme Court's Central Empowered Committee. Once all the leases were demarcated clearly, they hoped to carry on with business, guided by a proposed new mining law and the verdict of the Supreme Court. Friday's court order has poured cold water on those ambitions.

"When considering a blanket ban they should see the track record of the company. It is not fair to mix good eggs with bad eggs," says SY Ghorpade, head of Sandur Manganese & Iron Ores, one of the largest miners in the state. This view finds support from Krishna Byre Gowda, aCongress legislator who admits that many of his partymen were involved in illegal mining. Even so, he says, banning mining or export of iron ore is not a solution.

Robber Baron Capitalism

"India, like other countries before it, is passing through a phase where robber-barons have a significant presence in industries such as mining. The best way of dealing with this problem is to check discretionary powers at the local level," says Gowda.

What the Reddy brothers and their cohorts did, Hegde says in his report, was to have handpicked officials with vast discretionary powers at strategic posts in the police, mines, forest, revenue and other departments. These officers, numbering in the hundreds, facilitated the illegal mining enterprise and browbeat those who would not cooperate.
 
"Huge bribes were paid. Mafia-type operations were routine practices of the day," Hegde wrote.

Karnataka's chief secretary, SV Ranganath, agrees that the role of the local administration is vital. That is why, he says, the government has taken a series of measures to curb the problem. Export of iron ore has been banned by Karnataka, inviting a challenge from mining companies which say the state has no right to do so. Yeddyurappa even touted this as a measure of the government's commitment to tackling illegal mining but theSupreme Court asked Karnataka to lift the ban in April.

Ranganath says new checkposts have been added, lorries transporting ore are weighed correctly, ports are checked and officers with a track record of integrity have been posted at top levels in Bellary. But how long will the zeal last?

Hegde's report says the state government tried to post "officers with known integrity" in key departments, but they were transferred within a fortnight and the old ones returned. This was around the time Yeddyurappa was trying to cut the Reddy siblings to size. They reacted with a rebellion, threatening to bring down the government. Finding himself isolated, with little support from theBJP bosses in New Delhi, the CM backed off. Now the bosses are asking him to go.

Hegde also complained that he had made a number of recommendations to check illegal mining in a report in 2008. But the state government showed no urgency.

But this time, Ranganath says, the government is committed. It will implement the latest recommendations in "letter and spirit." Among them is an IT-based solution to track all consignments of iron ore from source to destination so that transparency is introduced and the scope for corruption minimised.

PK Mukherjee, the managing director of minerSesa Goa, believes e-permits are a welcome move because they will reduce the discretionary power of local authorities. "Human greed being what it is, the lesser human interactions you have, the fewer windows to corruption," he says.

He even has an innovative suggestion for the problem of the tiny plots that dot the mining landscape. Mukherjee feels that the sector should consider a model similar to successful agricultural cooperatives.

"Of course it will take lots of discussions between parties and has to be evolved over a period of time, but once it catches on, contiguous miners will be able to bring in the benefits of economies of scale," he says.

The proposed mining law could further reduce the discretionary powers of officials by mandating that all leases should be auctioned. And governments can insist that value addition will be a pre-requisite for allotment of mining licences.

A Cash Cow for Politicians

But all this is only for the future. Right now, civil society activists and indeed the public are so disgusted with the state of governance that they do not mind the courts operating aggressively.

According to environment lawyer MC Mehta, conditional clearances for mining projects on forest land are a "totally farcical exercise". "If you take any five such projects you will see that most of these conditions are flouted. There is no enforcement whatsoever in the country," he adds.

Senior advocate Salve traces the root cause of the problem to political funding. With deregulated industries no longer available as cash cows, sectors such as mining and real estate have become the targets of politicians on the lookout for money.

"How else do you explain residential properties selling for Rs 500-600 crore in Delhi? Mining is close competitor." The telecom scam, he observes, is a "media-created monster" but the mining scam has resulted in real losses for more than a decade.

Salve also doubts that discretionary powers will be surrendered because politicians do not want to let go. "The BJP and Congress can abuse each other all they want, but they are the same. I am not minimising the good work Santosh Hegde's team has done. We are all hopeful some good will come out of it. But, unfortunately, my cynicism overpowers my hope," he says.

The Economic Times, 31 July, 2011, http://economictimes.indiatimes.com/news/politics/nation/how-karnatakas-mine-mafia-can-be-reformed/articleshow/9423561.cms

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