In what could be one of the biggest scams that has come to light in a state already reeling from corruption, here’s another that involves former Karnataka chief minister B.S. Yeddyurappa, industries minister Murugesh Nirani and jailed mining baron Gali Janardhan Reddy — Bramhani Industries promoted by the Reddys has been illegally transferred to Rajinder Uttamchand Miglani, a Mumbai-based trader by the chief minister’s office.

Documents in possession of Deccan Chronicle show that just two weeks prior to stepping down from the chief minister’s post after being indicted in the mining report, on July 14, B.S. Yeddyurappa along with Mr Nirani cleared the files for the Reddys, who had bankrolled the 2008 assembly elections but subsequently fell out with the BJP.

As Chairman and Vice Chairman of the State High Level Committee, BSY and Nirani cleared the decks for the transfer of the Rs 36,000 crore mega steel plant project proposed in Bellary in violation of provisions of the Karnataka Industrial Area Development Board (KIADB).

Bramhani Steels was handed over to Uttam Galva Ferrous, with the illegal transfer causing the exchequer losses to the tune of over Rs 850 crores as they avoided stamp duty on the transfer of land.

In addition, Uttam received a readymade project with all the clearances from state industries to forests and environment ministry to pollution control board which was obtained using the offices of the Chief Minister’s Office (CMO) industries ministry and revenue which was handled by Karunakar Reddy, one of the Reddy brothers.

Bramhani transfer broke all rules

A Rs 36,000 crore steel plant project of Bramhani Steels belonging to the Reddy brothers was transferred to Rajinder Uttamchand Miglani and Co. in July 2011 in clear contravention of KIADB rules, documents with Deccan Chronicle show.

The decision was taken at the State High Level Clearance Committee (SHLCC) headed by former Chief Minister, B.S. Yeddyurappa just two weeks before he resigned. The steel plant spread over 4,000 acres in Hospet, Bellary now stands in the name of Uttam Galva Ferrous although the land was acquired in favour of Bramhani Industries Karnataka Ltd, under the directorship of former minister G. Janardhana Reddy, his wife G Lakshmi Aruna and T.H. Suresh Babu.

Once all the clearances were got from the departments concerned the ‘ready-to-use’ land was transferred to an altogether different company in violation of KIADB rules that clearly say the original applicant should hold not less than 51 per cent of the shares of the company till the end of the lease period and that new directors be allotted only upto 49 percent interest in it.

But in this case, Bramhani vanished from the project as the state government transferred it 100 per cent to Uttam Galva Ferrous Ltd. This was done after Brahmani, which had been allotted 4,000 acres of land in Vijaynagar in Bellary on April 26, 2010 and ahd obtained all clearances for the steel plant, suddenly moved an application before the Karnataka Udyoga Mitra seeking change in the constitution of its Board of Directors and change in name of the company and the name of its registered office.

A legal opinion was sought only for these requests without making any mention of transfer of the whole project to a different company.

The legal opinion was therefore as follows: “Karnataka Udyoga Mitra can accord an approval in the matter of change in the constitution of Board of Directors while according an approval in the matter of change of name from Brahmani Industries Karnataka Ltd to Uttam Galva Ferrous Ltd.’’

But on July 13, 2011, the SHLCC which met, "noted the legal opinion given by the Law Department and approved the request of the company for transfer of approval of the project from Brahmani to Uttam Galva Ferrous Ltd," lock, stock and barrel.

When govt moved at breakneck speed

The pace at which the transfer has taken place is baffling. On July 13, Udyoga Mitra, a single window agency that facilitates establishment of mega projects, receives legal opinion not on transfer of project but on change in the names of the directors and the company.

On July 14, the SHLC referring to unrelated legal opinion approves the transfer in blatant violation of rules of the land. Between May and July with backroom maneuvering, the company is sold to Rajinder Uttamchand Miglani and his associates.

KIADB rules state that an applicant seeking land doesn’t have any holding to dispose the property as the property is a leased land. An applicant can include partners but cannot sell more than 49% of the stakes and that majority holder must and should be the applicant or the promoter.

To be established on 4,000 acres of farmers’ land, the government had moved swiftly and had even acquired the land by collecting Rs 280 crore from the Reddys for the acquisition. After obtaining the clearances, the Reddys suddenly decided to sell the project.