Bangalore: Crisis Deepens - Reddys Linked to Hawala Trade

Daijiworld Media Network – Bangalore (SP)

Bangalore, Sep 8: Reportedly, Central Bureau of Investigation (CBI) has collected evidence that former Karnataka minister, Janardhan Reddy, has invested Rs 247 crore in Jagati Publications and Indira Television Company owned by MP, Jaganmohan Reddy, son of former Andhra Pradesh Chief Minister, Y S Rajshekhar Reddy. With this new finding, the case of illegal mining with which the Reddys from Bellary were accused to have been involved, is gaining new dimensions.

It is gathered that the said sum was invested through PVC Real Estate Company based in Malaysia. The money was initially transferred to Red Gold Company, Bellary, and then diverted to Jagati Publications. A CBI team was despatched on Tuesday itself, to look into the business interests of PVC Company there, and to verify its books of accounts.

Janardhan Reddy, it is said, transferred Rs 247 crore to Malaysia through a Hawala agent. This amount was re-routed to Red Gold and I2 Global Solutions in the guise of foreign investments, and the Hawala agent in question had collected three crore rupees as commission for facilitating the above transaction, CBI sources claim. It is learnt that incriminating documents about the transaction as well as commission payment were recovered from the house of Janardhan Reddy during the recent raid. The transaction was concluded in the year 2007.

CBI has found that the above two companies, Red Gold and I2 Global Solutions, are registered in the name of Diwakar Reddy, an Andhra Pradesh-based businessman. He happens to be the brother of Ramakrishna Reddy, a dominant director of Jagati Publications and Indira Television. Allegedly, Janardhan Reddy contacted the said Hawala agent in August 2007, and remitted Rs 247 crore to PVC Company. Within three days, the sum came back to Jagati Publications in the form of foreign remittance. CBI sources claim that this is one of the many examples to prove that Jagan’s business empire and Janardhan Reddy are closely linked.

CBI has found out that the annual turnover of PVC Real Estate does not exceed Rs 100 crore. It is apparent that it does not have the sources or capacity to invest Rs 247 crore in India. Moreover, the investment, which should have been made in real estate sector, has been diverted to media, which again is a clear violation of Foreign Exchange Management Act (FEMA). While the rules permit foreign investment up to 27% in media sector, in the case of the said investment, no clearance from the centre was obtained. These findings have armed CBI with the materials that have the potential of jeopardising the clout and future of Reddys, who are presently engaged in a legal battle with the agency.

Although some sources claim that Janardhan Reddy had bought PVC Company for routing financial dealings through a Benami transaction, this is yet to be confirmed. CBI feels that black money was being remitted through the Hawala agents to bring it back to the country in the form of foreign investment. It hopes that the team it has sent to Malaysia in this connection will be able to gather incriminating documents and proof against the Reddys.

CBI is also minutely investigating the dealings of Brahmini Steels, which is stated to be a joint venture between Jagan Reddy and Janardhan Reddy, although the name of Jagan does not figure in the company’s records. These findings may create further bottlenecks for Janardhan Reddy, who is under judicial custody, in his efforts to secure bail. CBI has also been looking into the affairs of companies in which Janardhan Reddy and Sriramulu are involved. It hopes to file supplementary FIR shortly. It is speculated that CBI has been gathering enough material to arrest both Jagan and Sriramulu by the end of this week. Sriramulu and Jagan figure prominently in the list of 85 persons with whom Janardhan Reddy has business partnerships.

During the period Y S Rajshekhar Reddy was the Chief Minister of Andhra Pradesh, 4,000 acres of government land had been granted to Brahmini Steel Company on a proposal submitted by Janardhan Reddy to the state government in 2006. After the death of Rajshekhar Reddy in 2009, Jagan had started selling his business entities, and convinced Janardhan Reddy and Sriramulu to exit from the Brahmini steel project. 55 percent of Brahmini Steel shares have already been sold by Janardhan Reddy to Jindal Company for thrice the value of investment made by him, retaining the balance shares with him. The proceeds of this transaction were diverted through the said Hawala transaction, CBI sleuths claim. CBI has found that hundreds of crores of rupees were routed through the accounts of a number of persons and close associates of Janardhan Reddy and Sriramulu around this time.

CBI is also looking into the allegation that the son of YSR was given a share in Brahmini Steel Company by Janardhan Reddy in return for the favour shown by Andhra Pradesh government to him by way of granting land at low rates and providing a dam and pipeline to meet his company’s water requirements.

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