Lethal MINES

How far the lethal combination of money power and political shrewdness will take the Bellary Reddys is worth watching, especially, after the brothers lost their biggest patron, YS Rajasekhara Reddy

Girish Nikam Delhi/Bangalore

Lord Acton had said: power corrupts, and absolute power corrupts absolutely. This has been proved true repeatedly ever since he made this statement in a letter to Bishop Mandell Creighton about 12 decades ago. But Karnataka's Reddy brothers have proved they have the power to corrupt anyone that comes their way with their money power.

The three sons of a humble police constable have risen to heights not imaginable even 10 years back in a state which has by and large been perceived as peaceful and relatively less corrupt. Not only the clout they have acquired but also the way they have used it brazenly has left everyone baffled.

Just over a decade and half ago, they were struggling to make ends meet. Later, they faced charges of cheating and deception while running a finance company. The trio's fortunes changed only in the early part of this decade. A minister in Karnataka's BJP government, who has seen the phenomenal and exponential growth of the Reddys from close quarters, recalls how their fortunes changed.

For decades, the mines in and around Bellary were controlled by traditional families like the Sandur Ghorpades. After the 1970s, the mines had fallen into disuse. The minister recalls how the Ghorpades had surrendered around 2,000 acres of iron ore mines during this period claiming that they cannot pay the royalty - a meagre Rs 40 per acre.

During this period, iron ore fines, which were extracted from the upper portion of the mines before one could reach the bottom for good quality ores used to manufacture steel, had become a huge problem. Storing or disposing tons of iron ore fines was a major headache as the cost of transportation and finding land space to pile them was a costly affair. In fact, owners of barren land demanded regular rent to store it. The income from selling these ore fines would not even compensate the transportation and storing costs.

As a result, Ghorpades and other mine owners started getting out of the business. However, things changed in the late 1990s. A European invention, which made use of these iron ore fines to manufacture steel, changed everything. It was during this time in early 2000 that the Reddy brothers, reeling under losses in the finance company business, were lured into the mining business by an Andhra mine owner who was in distress.

The controversial Obalapuram Mining Company, on the borders of Andhra Pradesh and Karnataka, spanned Kadapa and Bellary districts. It came under the control of the Reddy brothers. The mountains of iron ore fines lying all around Bellary was exploited by them. It was this hitherto worthless by-product of mining ore, which suddenly became a gold mine for the Reddys and others like the Lad brothers in the region.

The demand in China grew exponentially for this "worthless" product as it was preparing for the Olympic Games and its appetite for steel became virtually insatiable.

In about a couple of years, the Reddy brothers suddenly found their coffers growing beyond imagination. "They were earning anywhere between Rs 10 crore to Rs 15 crore a day during this period, legally and illegally," the minister recalls.

Meanwhile, a friendly YS Rajasekhara Reddy came to power in Andhra Pradesh in 2004. The Reddy brothers, in spite of being in the BJP, developed extraordinary clout in the neighbouring Andhra, too. Reports of them shifting the boundaries on the two state borders to assist their mining activities started surfacing. This has been found to be true by a committee appointed by the Supreme Court recently.