#India – Mining scam in Karnataka keeps getting bigger

BANGALORE, June 17, 2013

Sudipto Mondal, The Hindu 

Karnataka government lost Rs. 2000 crore in Commercial Taxes. File photo
The Hindu Karnataka government lost Rs. 2000 crore in Commercial Taxes. File photo

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.


Lokayukta’s appointment in Gujarat-beyond BJP versus Congress

Garga Chatterjee | Agency: DNA |

A couple of weeks ago, I attended a memorial event of the inimitable and now forgotten Rajnarain. It was socialists like him, communists and a whole plethora of ‘regional’ political formations, whose opposition to the Indira Congress led to the suspended animation of Article 356. This draconian Act was used primarily by the Congress (I) to dismiss insubordinate state governments. Just when you thought that conspiratorial centres in governor houses across state capitals had folded up, filling empty time cutting ribbons and enjoying largely undeserved chancellorships of universities, the old disease has found a new victim. This time it is Gujarat.

Gujarat governor Kamla Beniwal appointed RA Mehta as the Lokayukta of Gujarat, despite protests from the state government. The appointment was challenged in court. On January 2, the Supreme Court upheld the appointment. Predictably, the BJP has reacted strongly to the verdict. Kamla Beniwal is a former Rajasthan unit leader of the Congress (I). The relationship between governors and opposition-ruled states has never been rosy. But, beyond the obvious Congress (I)-BJP rivalry, this appointment and its subsequent legitimisation by the Supreme Court has far-reaching implications.

The problem is not whether RA Mehta is actually fit for the position. He possibly is. Neither is it about the embarrassment that an upright Lokayukta may cause to the Gujarat state government. The question is: Who will decide this fitness? In effect, an unelected person who is a former member of the party in power in Delhi (a party not famous for incorruptibility) has unilaterally chosen who would be the chief anti-corruption ombudsman in Gujarat, ignoring the popularly elected state government. Another unelected institution, the Supreme Court, has upheld this decision. So, an essentially political dispute has been brought into the purview of the judiciary. This is an insidious encroachment into the powers of the legislature. This cannot be a happy development for democracy.

There has been another encroachment. Neutrality and independence should be important characteristics of any Lokayukta. But, where did we get the ridiculous idea that anything that is ‘central’ is also neutral? Who says the government in Delhi can select better specimens of humanity than Gujarat?

As I said, in this case, an unelected body is endorsing the unilateralism of another unelected person over a whole elected assembly. More importantly, for all practical purposes, the governor is the thekadar of Delhi to keep opposition-ruled states in check. This thekadari system has colonial roots – an extractive colonial system that wanted to retain the right to meddle into democratic political expression of people. In the post-partition subcontinent, governors represent just that – a person who is answerable to Delhi over the heads of the people in a state. During the heyday of the Congress (I), the dismissal ofelected state governments using Article 356 happened through the connivance of the Delhi agent in a state — the governor. Now, due to the demise of the ‘Congress system’, the usage of this undemocratic tool has become politically unviable. However, the ideological framework in which the states are considered fiefs of the Centre has not died. It has, in fact, strengthened as the Centre launches frequent schemes to encroach on the few rights the states have – the NCTC scheme and the recent plans to make water a central subject — are of this nature. The present impasse in Gujarat is yet another attack on the federal structure of the Indian Union.

Going back to the Rajnarain memorial event, there I saw that giant, the former Supreme Court judge Rajinder Sachar. People of this generation, whose baptism happened in politics before they became judges, had an intimate understanding and respect for democracy. They have also seen Delhi usurp powers from the provinces over the decades. In contrast, latter generations (and judges are not outside it) have increasingly grown up with an ‘idea of India’ that is same as a Delhi lording over the states. This ‘new normal’ no doubt makes people less sensitive to violation of states’ rights. All institutions that are dominated by the elite come with a certain ideology about nationhood, development, future, the ‘idea of India’ and other such things. This results in larger problems, especially when judiciary starts arbitrating political disputes.

The BJP has been livid over this issue and it should be. However, its sensitivity on the curbing of federal structure should go beyond Gujarat. If it comes to power in Delhi, it owes to the people, steps on the implementation of the Sarkaria commission’s recommendations that sought to strengthen India’s federal structure. Otherwise, the BJP’s should not subject people to opportunist theatrics on federalism. People deserve action, not actors.

Garga Chatterjee is a postdoctoral scholar, Massachusetts Institute of Technology.


Karnataka: Another RTI activist found murdered; whistleblowers demand CBI probe

By Newzfirst Correspondent1/12/13


Bangalore – Less than two months since the murder of an RTI activist from Bangalore, the state Saturday witnessed a brutal murder of another whistle-blower. This time Vasudeva Adiga hailing from coastal district of Udupi followed the fate of Lingaraju, who was allegedly murdered by the local corporator for exposing corruption last November.

The body of a missing RTI activist Vasudeva Adiga has been found in brutally murdered state on Saturday. Adiga, who hails from Vandaru village in Udupi district, had gone missing since Monday, 7 January.

The body has been found at Kadur of neighboring Chickmagalur district, about 225 kms from Udupi, with multiple injuries and its face smashed beyond recognition.

At the same time other whistle-blowers from Udupi district have alleged the involvement of local influential politicians, businessmen and top level government servants behind the murder. They have also demanded CBI enquiry into the murder.

Adiga had drawn the wrath of some local politicians and high-rank officers of the district for being very instrumental in exposing the corruption at various levels, said Shreeram Diwan, a journalist cum RTI activist.

Recently he had obtained some vital documents regarding alleged irregularities in much-delayed Varahi irrigation project, affairs of Mandarti temple and Nirmiti Kendra through RTI, he said.

While Varahi irrigation project has been delayed since three decades, Mandarti temple comes under Muzurai department of Government of Karnataka. The Nirmiti Kendra headed by the Deputy Commissioner of the district serves as a seminal agency to generate and propagate innovative ideas on housing and participates in tender of any government or private organization and executes the same in line with the objectives. It can undertake the government construction projects that cost less than 1 crore rupees.

“Adiga has been abducted and murdered after he determined to complain Lokayukta over misappropriation of public funds that run in multiple crores.” explained Diwan.

According to Diwan, Adiga had played crucial role in exposing huge irregularities by the stone quarries at Goliangadi recently. Following the complaints, the mining department had fined those companies upto Rs.4 crore.

“He even questioned the district authorities over granting permission to those blacklisted stone-quarries, which had not even paid the fine amount imposed by the department, to operate at other places.” he added.

Sources said that Adiga was approached by those officials, couple of days back to his abduction, for a compromise for which he did not budge. He was also threatened of dire consequences, the sources said.

Adiga went missing on the night of 7 January while he was returning to his home in 2-wheeler along-with some important documents obtained through RTI.  Family members found his deserted mobile, footwear, pen and two-wheeler on following day about 12kms away from his village, but not those documents he was carrying.

Karnataka Women Commission -Blames Boys Entirely, No Mention of HJV #Moralpolicing #Mangalore #WTFnews


Manjula Submits Report

Special Correspondent
Daijiworld Media Network – Bangalore
Bangalore, Aug 9 : After what could be termed as a one-sided and highly biased ‘investigation’, Karnataka state Women’s Commission chief Manjula submitted the report to home minister R Ashok on Wednesday August 8, placing the entire blame and fault on the boys who were partying at the Morning Mist Home Stay, in Padil, Mangaloreon July 28 evening.The assault on the young boys and girls by alleged Hindu Janajagarana Vedike (HJV) activists has received wide and intense criticism from people in India and abroad.

Strangely, instead of finding fault with the perpetrators of the Morning Mist Home Stay attack, Manjula alleged in her report that the boys were under the influence of drugs, and that the police let them off easily without subjecting them to medical tests.

Surprisingly, nowhere in the report was HJV’s name mentioned!

Though police, including the ADGP had given clean chit to the boys, the focus will now once again shift on the revellers, if the state government asks for an enquiry against the boys.

As she had said during her press conference in Mangalore last week, Manjula in her report has questioned, “Did the boys who arrange the birthday party try to mislead the girls? Investigation and action is essential.”

What is even more shocking, Manjula has even recommended the transfer of the Lokayukta police official whose daughter was one of the victims of the attack, for allowing her to attend the party!

She also took care to recommend action against the owner of Morning Mist Home Stay also.

Speaking to daijiworld.com, a senior and well-known lady social activist in Mangalore , who was shocked to learn about Manjula’s report, said  “After viewing the entire video clip, if responsible citizens like C Manjula shift the entire blame on the boys and the girls, without a mention of the organization that openly claimed responsibility intitially and later denied on realizing the wide coverage and possible impact of the incident, it would be a dangerous development for humanity, as an open truth is being hidden with fabricated facts

Homestay attack: Report speaks of ‘saving the youth’

The Karnataka State Women’s Commission report on the attack on a group of youngsters at Morning Mist Homestay at Padil on the outskirts of Mangalore, submitted to Home Minister R. Ashok on Wednesday, speaks of “saving youth from forces that lead them astray”, even as it demands action against the police for failing to prevent the attack.

In the five-page report, the commission has demanded a comprehensive investigation of the incident by a police officer of the rank of Director-General of Police, the arrest of all the people named in the first information report (FIR) and action against the local Police Inspector who failed to reach the spot on time.

“There should be an investigation as to why there was no vigil on Subhash [Padil] and his men even though they were involved in attacks earlier as part of the Sri Rama Sene,” says the report. It does not, however, invoke the name of the Hindu Jagaran Vedike, which is allegedly responsible for the attack on July 28, anywhere.

Questioning motives

After these recommendations in the first two pages that are directly related to the police, the report moves on to raise questions about the owner of the ‘homestay’ and the organisers of the party.

The report recommends an investigation into the activities of the owner of the ‘homestay’ and asks why those who were at the party were let off by the police without confirming through a medical examination if they had smoked ganja.

“There should be an investigation as to whether those who had organised the party were leading the boys and girls astray,” says the report.

Going a step further, it says that the father of one of the girls at the party, who is a police official, should be transferred out of the district.

‘Exercise self-restraint’

The report says that the images of the young women being attacked were repeatedly beamed on television, which had caused much mental trauma to them and their families.

It has said that the media should exercise “self-restraint” and the government should call a meeting of editors in this regard.

In a comment that seems to hold no direct bearing to the incident in question, the commission recommends that a separate cell be set up in the Police Department to deal with cases of missing women who are trafficked, especially in border districts such as Dakshina Kannada.

The report says the police should keep watch on homestays and clubs that indulge in illegal activities and on individuals who lure women into illegal activities.

The commission’s report recommends that the educational curriculum should have a focus on creating awareness on these issues.

Chairperson of the women’s commission C. Manjula and member V.M. Maithili visited Mangalore on August 1 to look into the attack.

Ms. Manjula’s earlier statements questioning the motive of the party organisers had attracted flak for being a “diversion” from the issue of women’s rights.

‘Comprehensive view’

Speaking to The Hindu after filing the report, Ms. Manjula defended her approach saying that there was a need to take a “comprehensive view” of the situation and the report had tried to do that.


How mining mafia established a “republic of fear” in Bellary

BANGALORE, June 18, 2012

Sudipto Mondal, The Hindu

An April 2006 image (top) of the Dalmia mines shows a verdant expanse. In the Google Earth image (below) obtained in March 2010, the area is seen ravaged by massive mining.

An April 2006 image (top) of the Dalmia mines shows a verdant expanse. In the Google Earth image (below) obtained in March 2010, the area is seen ravaged by massive mining.

Witnesses who have testified against Janardhan Reddy and his men fear the mining baron’s release from jail

A torrent of calls flooded the CBI unit in Bangalore when T. Pattabhi Ramarao, the CBI judge in distant Hyderabad, granted bail to the jailed mining baron, G. Janardhan Reddy, on May 11.

Many of the frantic calls were from the 300-plus witnesses painstakingly persuaded by the CBI-Bangalore to testify in the case registered against Mr. Reddy’s flagship firm, the Associated Mining Company (AMC).

Download PDF — Dalmia mines: April 2006 and March 2010

Mr. Reddy’s judicial custody at the Parapana Agrahara Central Prison in Bangalore ends on Monday. On the directions of the Andhra Pradesh High Court, he is likely to be re-arrested as soon as he steps out.

Although path-breaking in its detailed evidence-based indictment of Mr. Reddy, the final Lokayukta report on illegal mining had its limitations. By contrast, the CBI’s unique position as a statutory investigative body has enabled it to find the evidence that, it believes, clinches what the Lokayukta could but indicate.

“During the peak of Reddy’s reign over Bellary, some witnesses had been kidnapped, others beaten and almost all intimidated by Reddy and his henchmen,” a CBI officer in Bangalore told The Hindu on condition of anonymity. Their testimonies given under oath before the judge of the Special CBI Court in Bangalore would make it difficult for them to retract their statements. But the CBI’s fear was some of the witnesses may prefer the wrath of the court to the threat of violence. “Our entire case was on the verge of collapse until the Andhra Pradesh High Court stepped in and suspended Pattabhi Ramarao on charges of accepting a bribe of Rs. 5 crore to grant bail to Reddy,” says a CBI Police Inspector.

Lawyers of Reddy remained tight lipped when asked about whether they would launch a fresh attempt to secure the release of the former BJP minister. C.V Nagesh, senior counsel in the case told The Hindu that he is yet to be briefed by the counsel-on-record representing Mr. Reddy.

Speaking to The Hindu, senior CBI officers offered examples of how the mining mafia established a “republic of fear” in Bellary. Many of these details have not been made public before because the court where witnesses deposed and were cross-examined was out-of-bounds for reporters following the violent clash between lawyers and journalists outside the sessions courts here earlier this year — the last time Mr Reddy was produced in an open court.

For example, one key government employee states under oath: “On April 26, 2011 the Range Forest Officer sent me with my colleagues to the Lokayukta Office and asked me to meet U.V. Singh [Indian Forest Officer and chief investigator who compiled the Lokayukta’s illegal mining report]. He asked us how we could issue so many mining permits [to AMC]. We explained [in writing] that there was threat and force from G.J.R. [Reddy] due to which we signed the permits.”

The same witness states that he was summoned on May 9 by Mr. Reddy. [Pooh-poohing the Lokayukta report, Ali Khan, Reddy’s pointsman, allegedly stated: “The government belongs to GJR.” The witness deposed that he was forced, under threat of suspension, into signing a letter stating that U.V. Singh had coerced them into submitting statements against Mr. Reddy. Presently sharing space at the Parapana Agrahara Central Prison in Bangalore with Mr. Janardhan Reddy, the 1984-born Mehfouz Ali Khan is an engineer who became one of Mr. Reddy’s most trusted enforcers.

AMC — a dead mine

In his testimony, an Assistant Engineer of the Mines and Geology Department said Mr. Ali Khan coerced him to issue false stock certificates to the AMC. He yielded, knowing full well that the AMC owned a dead mine in Hospet, Bellary, which had not yielded highquality iron ore for several years. Mr. Reddy used such false certificates to legitimise ore that he had looted from other mines in the region, the CBI alleges.

Kidnapped, tortured

The testimony of the promoter of the mining firm Tiffins Barytes shows how Mr. Reddy’s men used muscle power to take over the operations of other mines.

Mr. Ali Khan and his men forced their way into the leasehold area of Tiffins Barrytes and extracted one lakh tonnes of high-quality ore between January and June 2010, according to a sworn statement by a company employee.

When senior company executive Vinod Jadhav protested, he was kidnapped and tortured at an undisclosed location. His complaints to the police and other authorities yielded no action.

Muscling in

The statement by the owners of the Siddapura Iron Ore Mines further establishes the extent of collusion between bureaucrats and Mr. Reddy, the CBI says. Repeated requests by Shaik Saab, the owner of Siddapura mines, for permission to extract ore from his leasehold area were turned down by forest officials. Meanwhile, Mr. Ali Khan approached him with offers to manage the mine. He promised to get the necessary clearances and in return Mr. Saab gave Mr. Ali Khan a 75 per cent stake in the earnings.

With its implicit threat of violence, it was an offer that Shaik Saab could not refuse. Ironically, Shaik Saab did not even get the 25 per cent that he was entitled to. “I was not even allowed to enter my mine after Ali Khan took over,” he said.

Forced takeover of AMC

The manner in which Reddy and his wife G. Aruna Lakshmi came to be the owners of the Associated Mining Company is a story in itself. In his testimony, K.M. Vishwanath, the former owner of AMC, told the Court he was coerced into handing over all his mining permits to Mr. Reddy. These permits were used by the latter to legitimise ore that he used to allegedly steal from the leasehold area of the Dalmia mines in Hospet. Despite Mr. Vishwanath’s protests against this extortion, Mr. Reddy and his wife Aruna Lakshmi forced themselves in as partners in AMC, the CBI alleges. Mr. Vishwanath and his other partners were subsequently edged out, and Reddy and his wife came to be the sole partners by August 2009.

Two scientific surveys commissioned by the CBI — done by the Indian Bureau of Mines (IBM) and Singareni Collieries Company Ltd. (SCCL) in April 2012 — corroborate the Lokayukta report’s finding that AMC was a front for illegal mining, and the ore was actually extracted illegally from elsewhere.

Google it

While records with the Forest department, and the department of Mines and Geology state that Dalmia mines are in a state of disuse, satellite enabled images tell a different tale. (See satellite pictures) But the CBI says all the scientific evidence detailed in its chargesheet would have counted for little without the evidence from witnesses in court. A CBI investigator cites the evidence provided by an owner of a firm hired by the AMC to extract and transport ore. He showed investigators the exact spot from where he had extracted 33 lakh tonnes of ore on Mr. Ali Khan’s orders.

The investigators plotted the expanse on government maps. “The site was right in the middle of the Dalmia mines, nowhere near the leasehold area of the AMC,” the investigator told The Hindu.

NRHM financial wrongdoings reflect systemic irregularities

Prioritizing healthcare for India's rural poor

Prioritizing healthcare for India’s rural poor (Photo credit: Gates Foundation)

It turns out that some state officials were using NRHM to enrich themselves
Vidya Krishnan

New Delhi: The National Rural Health Mission (NRHM) was launched seven years ago with the goal of improving healthcare delivery to people in villages, especially the poor, through a generous infusion of federal funds. Local authorities were given a relatively free hand in deciding how to spend the money, with the Centre promising funds with no strings attached for the first seven years.

It turns out that some state officials were using NRHM to enrich themselves instead, raising questions about oversight, governance and accountability at the government’s marquee public health programme, which has won a five-year extension because many of its goals, such as significantly reducing child mortality and improving maternal health, haven’t been met.

Last month, several senior officials of Madhya Pradesh’s health department came under investigation for allegedly siphoning off Rs800 crore from the programme’s budget.
That follows a corruption scandal surrounding NRHM in Uttar Pradesh after allegations that Rs5,700 crore was embezzled from the scheme by health department officials during the regime of Mayawati’s Bahujan Samaj Party, which was ousted from power in the February-March assembly elections.

Six officials directly associated with the scheme in India’s most populous state died in controversial circumstances, one of them in police custody.

In Madhya Pradesh, health director Amarnath Mittal, who was overseeing NRHM’s implementation in the state, was suspended after income-tax (I-T) raids led to the recovery of evidence that he possessed unaccounted property worth Rs100 crore, according to Siddharth Chaudhary, superintendent of police, Lokayukta, an independent anti-corruption body that holds oversight of the state government.

Some Rs38 lakh in cash, 2.5kg of gold, jewellery worth Rs.72 lakh, foreign currency (€3,000 and 1,080 Australian dollars) and documents claiming titles for 50 acres of land were seized in the raids, Chaudhary said.

Public health experts say the case illustrates the larger malaise of corruption in India rather than fault lines in the programme that allowed flexible spending at the grassroots level.

“There is a need to delink the scheme from the system. The problem is not with NRHM’s design, but with governance,” said Amit Sengupta, co-convenor of the People’s Health Movement. “NRHM has been implemented efficiently in many states. Corruption at this level and of this kind—where bureaucrats are amassing Rs100 crore—does not happen without the connivance of elected representatives.”

“Besides, there are vested interests that want NRHM-like schemes to fail so that the argument in favour of outsourcing services to the private sector is strengthened,” Sengupta added. “There is a lot of evidence that there is connivance between government officials and private sector.”

The alleged financial wrongdoing in NRHM reflects the systemic irregularities that plague centrally funded schemes, including the Mahatma Gandhi National Rural Employment Guarantee Scheme and the Jawaharlal Nehru National Urban Renewal Mission, said Sidharth Sonawat, assistant director and healthcare analyst at industry lobby group Federation of Indian Chambers of Commerce and Industry.

“This is a result of giving large amounts of funds, poor administering at state-level organizations and even worse monitoring from the Centre,” Sonawat said. “In the case of NRHM, district-level officials to elected representatives seem to be aware of the irregularities; otherwise such blatant, systemic corruption cannot exist in isolation.”

According to officials in the Madhya Pradesh Lokayukta, recent raids have established a payoff between the state’s health department and the procurement cell, Laghu Udyog Nigam. These officials didn’t want to be identified because they are not authorized to speak to the media.

An audit by the Accountant General of Madhya Pradesh, the apex body for compiling and preparing state-level accounts of public spending, has revealed that the health department incurred expenditures worth Rs67 crore without having budgetary provisions or approvals from the Union government.

In a letter dated 7 May, the audit officer sought a response from Ravindra Pastore, NRHM mission director for Madhya Pradesh.

The investigative arm of the Lokayukta is currently probing 13 cases of misuse of office against health commissioner Manohar Agnani and nine cases against Mittal, but is yet to link them to NRHM.

“As of now, Mittal’s raid is being treated as a case of disproportionate assets and we have not yet linked it to NRHM even though he was heading the department that rolled out the health scheme,” said Chaudhary.

“Besides disproportionate assets case, we received complaints alleging irregularities under various NRHM schemes in March and we have started our investigations,” he added.

While Mittal declined to comment, Agnani maintained that the cases of irregularities have been exaggerated and that he was “unaware that contracts had been given to blacklisted firms, substandard material procured at inflated rates, and unqualified officials had been employed”.

“My director (Mittal) would be best placed to answer these queries,” he said.

The department’s previous commissioner, Rajesh Rajora, is currently under suspension for irregularities to the tune of Rs11 crore, according to official data. Previous mission director Ashok Sharma was suspended in 2008 after Rs130 crore was allegedly recovered from his residence by I-T officials in a raid. Sharma was reinstated in 2010 and is currently director, health services.

“They (I-T officials) recovered only Rs27,000 from the raid at my residence. Subsequently, judicial inquiries were conducted in nine cases in which no irregularity was found,” Sharma said. “All those cases have been closed.”

Madhya Pradesh health minister Ajay Vishnoi resigned in 2008 on moral grounds after I-T officials raided 56 places in the state and unearthed evidence of a nexus between politicians, bureaucrats and suppliers.

This time, cases being investigated by the state’s Lokayukta include procurement of an insecticide under the anti-malaria programme, causing the exchequer a loss of approximately Rs70 crore; imposing monopolies in the purchase of ingredient used for analysis of blood samples that caused a loss of Rs20 crore; appointments in the health department that did not follow prescribed procedures; and favouring of two companies—Nitapol Industries and Kilpest India Ltd—that were blacklisted by the Gujarat government for supplying substandard insecticides.

Both the companies declined to comment on the matter.

NRHM was launched with a budget of Rs6,730 crore; the outlay swelled to Rs20,822 crore in the latest budget. It aimed at improving health indicators in rural areas, with a special focus on 18 states that lagged behind the rest on key health parameters.

It aimed at reducing the infant mortality rate (IMR) to 30 per thousand live births and the maternal mortality rate (MMR) to 100 per 100,000 live births and the total fertility rate (TFR) to 2.1 nationally, in line with the millennium development goals.

At the time of launch, Madhya Pradesh’s TFR was 3.6 while, MMR and IMR stood at 335 and 76, respectively. Seven years and Rs3,381.93 crore of spending later, the health indicators remain below target at 3.3, 269 and 67, respectively.

Still, the improvement is commendable given the backdrop of leakages, some public health experts say.

“If these figures are to be trusted, the drop in maternal mortality rate is impressive,” said Sakthivel Selvaraj, health economist at the Public Health Foundation of India. “The nine-point drop in infant mortality is also not bad. Overall, it is evident that NRHM has made a dent in these figures despite leakages in the system.”

Last month, the Comptroller and Auditor General (CAG) said it found large-scale financial irregularities in the NRHM scheme during Mayawati’s reign over Uttar Pradesh.

According to CAG’s audit report, funds worth Rs1,768.12 crore were received from the Centre but never shown in state government accounts. The report revealed that the government had not maintained accounts for advances worth Rs4,938.74 crore.

The Central Bureau of Investigation is investigating at least two ministers in Mayawati’s government and several bureaucrats in connection with financial irregularities.

Union health secretary P.K. Pradhan said NRHM could not be faulted because of Uttar Pradesh; anyway, only a portion of the scheme allowed flexible use of funds, he said.

“Because of UP (Uttar Pradesh), everyone is faulting NRHM without seeing how well it is implemented in southern states,” Pradhan said. “The government will never be able to implement any scheme if we start faulting in on this basis. Procurement and construction, etc., are the state government’s prerogative and states with better governance have done well under NRHM. Since funds were easily available in large amounts, a portion was flexible; states which lacked transparency took advantage of this.”

“It is vacuous to blame the system when the issue is individual intention and integrity of state-level bureaucracy and politicians,” Pradhan added.


VICTORY !!!-Agreement with Christy Friedgram cancelled #Goodnews

Bageshree S., Bangalore , The Hindu

Government Order  issued in the light of ‘several instances of lapses’

The Government Order says that the food supplied by the company did not have stipulated amount of protein and calories.— FILE PHOTO: M. Subash

The Government Order says that the food supplied by the company did not have stipulated amount of protein and calories.— FILE PHOTO: M. Subash

The controversial agreement between the Women and Child Welfare Department and Christy Friedgram Industry on supply of supplementary nutrition food to anganwadis has finally been cancelled in the light of “several instances of lapses”.

The Government Order (GO) of May 31 admits that there had been serious flaws in the execution of the agreement by the company, ranging from deviously retaining control over Mahila Supplementary Nutrition Production and Training Centres to flouting stipulated standards in maintaining quality of food supplied to anganwadis under the Integrated Child Development Scheme.

While the department officials previously maintained that company was not hired as a contractor for food supply but only as a capacity builder, the Government Order makes it clear that it (the company) had indeed been indirectly working as contractor.

As per the April 2009 agreement, the company was to set up mahila training centres and train the staff to work completely independently before May 2012. These centres were to produce nutritional food, package and supply it to anganwadis for feeding children, pregnant women and lactating mothers.

“Even after three years, the mahila training centres are not capable of working independently,” says the Government Order.

The members of these centres are neither technically nor administratively competent, according to the Government Order.

More importantly, it admits that the company continued to have control over the mahila training centres even though the company was only meant to hand-hold them.

It says that the project facilitators were employees “in the pay of the company” and the raw material too continued to be supplied by the company.

“Rather than procure material from the local market, items such as sambar powder, ragi malt and high protein mix were supplied from units set up by the company in Nelamangala, Davangere and Gulbarga,” the Government Order says and adds that the setting up of these units was not brought to the attention of the department.

Low quality

The Government Order says that the food supplied by the company did not have stipulated amount of protein and calories and used colours that were not permitted.

An earlier inspection had found that there was no hygiene maintained and food contained ‘coliform bacteria’. Contrary to the terms of the agreement, the food quality and infrastructure was not certified by a competent authority.

Several of the mahila training centres have been running under loss, which again is the responsibility of the capacity builder, and the government has been giving them loans of Rs. 10 lakh each at an interest rate of four per cent, in an attempt to help them revive.

Child rights and civil society organisations have for long been campaigning against the company being involved in the supply of food to anganwadis, pointing to several loopholes now admitted in the Government Order. Cases of child malnutrition in the State had further fuelled this controversy.

Three officials, the former Director of the Department Shamla Iqbal, Deputy Director Usha Patwari and Assistant Director Muniraju, are being investigated by the Lokayukta in connection with the scam.

  • The company was supplying supplementary nutrition food to anganwadis
  • Under the agreement, it was to have set up mahila training centres


In Karnataka, only babus and cattle enjoy mid-day meals- children dying…….

Children are dying of malnutrition, but their supposed saviours are minting money from the ICDS scheme, reports Imran Khan in Tehelka

Food for thought 54,260 anganwadis serve mid-day meals in Karnataka

Photos: Sriram Vittalamuthy

A PROBE by the Karnataka Lokayukta into the supply of food to the Integrated Child Development Services has found that Department of Women and Child Development officials in connivance with the contractor, Christy Friedgram Industry, were siphoning off funds meant for the mid-day meal scheme. The revelation has come at a time when the state is witnessing close to two-three deaths every day due to malnutrition.

The mid-day meal scheme, which costs the state government Rs 600 crore per year, was meant to provide basic nutrition for children below the age of six. However, DWCD officials and CFI delivered sub-standard food after skimming off funds.

According to sources in the Lokayukta, DWCD Director Shyamala Iqbal used to receive Rs 20 lakh per month as bribe, while Deputy Director Usha Patwari and Assistant Director Muniraju used to get Rs 15 lakh per month from CFI for their tacit involvement. “All department officials, right from the taluk level, would collect money every month from the CFI office in Malleswaram, Bengaluru,” the sources say.

“During 2010, we received an anonymous letter detailing the racket, which was duly forwarded to the Lokayukta for investigation,” says Nina Nayak, chairperson of the Karnataka State Commission for Protection of Child Rights (KSCPCR). She submitted a report to the government following complaints by gram panchayats about the sub-standard food supplied by CFI. “We received letters from parents who complained of their children falling sick after consuming the food,” she says.

The ICDS is the largest programme for promotion of maternal and child health and nutrition not only in India but the whole world. The scheme was launched in 1975 in pursuance of the National Policy for Children. The beneficiaries are children below six years, pregnant and lactating women and women in the age group of 15-44 years. In Karnataka, there are around 54,260 anganwadis, with 33 lakh children entitled to free mid-day meals.

Earlier, the government-owned Karnataka State Agro Corn Products Ltd (KSACPL), which used to manufacture and supply energy foods to anganwadis since 1973, provided mid-day meals. “The KSACPL started making losses in 2001, after the DWCD handed over 50 percent of the energy food supply contract to CFI,” says H Subbaiah, the last managing director of the company. Due to insurmountable losses, the company was shut down last month.

Concerned over reports of fraud and tardy implementation of the ICDS scheme, the Supreme Court had issued a directive in October 2004 prohibiting the use of contractors in the supply of mid-day meals under the scheme.

“This is when CFI hit upon a novel plan to counter it,” says a middle-level DWCD official, who was shunted out later. “CFI entered into a five-year contract in 2007 with a budget of Rs 600 crore for building the capacities of self-help groups.” The company then set up the Mahila Supplementary Nutrition Production and Training Centres (MSNPTCs) in 139 of the 176 taluks.

An employee working in one of the MSNPTCs later wrote to the KSCPCR explaining the way these centres were being run. A copy of the letter, which is with TEHELKA, throws light on the way the DWCD looked the other way when CFI went about doing its business.

In Raichur district, 2,689 kids died due to acute malnutrition in April-August 2011, says official data

According to the letter, “Many of the training centres were not producing the required quantity of energy food. They were procuring ready-to-eat meals directly from Tamil Nadu and dumping it in the training centres. The food was rejected by the locals and was used as fodder for the cattle. Indents given for fulfilling orders were manipulated and illiterate women were hired for the job (according to the agreement, they had to pay a small part of the profit to these women).”

“CFI had set up a parallel channel of giving bribes,” say sources in the Lokayukta. “Right from the taluk level, child development project officers would receive around 1 percent of the amount cleared.”

This year, on 10 March, Lokayukta officials raided Shyamala Iqbal’s house and found 900 grams of gold, diamonds worth Rs 4 lakh, bank deposits worth Rs 65 lakh and a Toyota Innova. They also found documents showing ownership of a commercial complex at Church Street, Bengaluru, a house in HAL 3rd Stage worth Rs 60 lakh and a site in Arkavathy Layout, also in Bengaluru. Shyamala Iqbal did not respond to queries by TEHELKA.

The whole network was managed by CFI employees Kumaraswamy and SS Mani from the state level. “Earlier, the money was given to the officials wherever they were located. After a dispute, it was centralised at CFI’s Malleswaram office,” says the officer. Interestingly, a faction of the pro-Kannada outfit, Karnataka Rakshana Vedike, was roped in for proper distribution of the bribe money. All the officers would come in the first week of every month to collect their share.

Responding to TEHELKA’s queries, CFI general manager (administration) Shivanandan said, “The matter is sub-judice and an inquiry is going on. It is too premature to comment on anything now.”

According to information obtained under RTI, more than 21 lakh children in the state are mildly malnourished and 12 lakh moderately malnourished. More than 70,000 suffer from severe malnutrition.

Even if one goes by the official data, the rate of deaths is quite alarming: almost two-three deaths per day due to child malnutrition. According to the DWCD, between April and August 2011, 2,689 children have died due to acute malnutrition in Raichur district alone.

Hunger Pangs

Rs 600 cr the annual cost of the mid-day meal scheme

33 lakh children in the state are eligible for mid-day meals

70,000 children suffer from acute malnutrition in the state

2-3 children die of malnutrition every day, on an average

THAT THE state cannot afford to be complacent on the child nutrition front is obvious from Karnataka’s 11th rank in the India State Hunger Index. According to the findings of the third National Family Health Survey (NFHS) in Karnataka, the infant mortality rate is 43 deaths per 1,000 births (before the age of one) and 55 deaths per 1,000 births (under the age of five). The NFHS study also says that infant mortality in rural areas is 28 percent higher than in urban areas. The study also reveals that more than half the women in Karnataka (52 percent) have anaemia, including 63 percent of pregnant women with mild anaemia. The recently released state Economic Survey report of 2012 reveals that poverty in Karnataka continues to be the highest among the southern states.

As the CFI battles to clear its name, the government is unlikely to renew its contract. However, it has inked a deal with mining giant Vedanta to fill in CFI’s shoes. On 10 April, Vendanta entered into an MoU with the government to provide mid-day meals to two lakh kids in four districts. Not only is this Rs 12 crore deal in violation of law (as the SC ruling of 2004 mandates no middlemen), it is being seen as part of Vedanta’s PR exercise in the wake of controversies surrounding its mining operations in Odisha and elsewhere.

R Manohar, head of programmes at South India Cell for Human Rights Education and Monitoring, says he can’t understand why the state is showing urgency in signing the deal, when there is already a PIL in the Karnataka High Court challenging the involvement of middlemen. “We have seen how CFI functioned. We don’t want another private company playing with the children’s lives,” he says.

Imran Khan is a Senior Correspondent with Tehelka.

Christy Friedgram Industries (CFI), involved in ICDS SCAM

Tom Flynn, CFI Executive Director

Tom Flynn, CFI Executive Director (Photo credit: Marty Stone)

Ex-staff spill the beans on Christy’s cheat code

Nandini Chandrashekar, Bangalore, Apr 5, 2012, DHNS :

Christy Friedgram Industries (CFI), the company under investigation by the Lokayukta police for fraudulent practices in the supply of supplementary nutritional food to anganwadis under the Integrated Child Development Scheme, seemed to have an elaborate system of deception in place.

Former employees of CFI approached Deccan Herald and shed light on some of the bad practices adopted by the company, a downright violation of the norms.

The officials of the Department of Women and Child Development have consistently said that CFI was not hired as a contractor for food supply in violation of Supreme Court directives, but they were merely into capacity building.

The capacity building meant the setting up of 137 Mahila Supplementary Nutrition Production and Training Centres (MSPTCs) at the taluk level all over the State.

These centres are supposed to produce the nutritional food and package them according to requirements for supply to anganwadis, to be fed to children, pregnant and lactating mothers.

A former employee of CFI – who was active in the recruitment of women for the MSPTCs – says they were instructed not to hire women who were educated.

The logic behind this was simple. In accordance with the Supreme Court directives, the State government – in its agreement with CFI – had stated that the company apart from getting paid for the raw material it supplied to the MSPTC, would be paid a profit of Rs 1 per kg of food supplied. The rest of the profit that was accrued had to be shared among the members of the MSPTC.

Hiring uneducated women and semi-literate women ensured that no one understood the account details, the indents of supply or any of the accounting they would have to look into; what the turnover of their unit was, which ran into several crores of rupees annually. All the profits were going directly to CFI and the employees of the MSPTC were blissfully unaware.

“Each of the MSPTCs had a staff member of CFI overlooking all financial details and transactions. The President, Vice President and Treasurer were women who had no clue what was happening. They signed on documents when they were told to and some of the women gave their thumb impressions.

Their job merely was to load and unload the food material, mix the different items and package the food. They were paid a salary for this job. Beyond this, they did not know anything,” the former employee said. Members who usually number around 22 in these centres have absolutely no medical facilities and even miss out on incentives. If they miss one day of work, their salary is deducted, the ex-staffer added.

Not only were the women uneducated, there were also instructions to the employees that the location of the MSPTCs had to be in a remote area. “Our superiors insisted that the place we choose has to be as far as possible and located in villages rather than in taluk headquarters.

Only later did we understand that this was so, so that the place is not accessible easily for inspections by government officials,” the ex-employee said.


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