Home Columns

The Adani mess - if only the guilty had been punished then

The expose of the Adani group by Hindenburg Research that raises damning questions about the absence of regulation in the country - is getting murkier by the day. But the Belekeri port scam in which a colossal quantity of iron ore was stolen and shipped to China provides both evidence and perspective on how billionaires in India were built.

By Sanjay Kapoor
New Update

publive-image Belekeri port | Photo courtesy: karnatakaports.org

On February 20, 2010, the Karnataka Lokayukta police raided a tiny nondescript port in Belekeri and seized documents and computers. Belekeri is a village in Ankola in Karnataka and its port - Belekeri Port - became renowned after the media started widely reporting the notorious Belekeri port scam. The scam relates to the seizure of 3.5 million tons of iron ore that was being exported illegally from the port.

After the police took control of the large quantity of the illegal iron ore at this poorly guarded port, within months the iron ore got stolen. On the basis of the findings that emerged from the seized computer and documents, the Karnataka Lokayukta discovered a scam worth Rs. 50,000 crores (At today’s prices, it would be around Rs.1 lakh crores at least). On further investigations, the Lokayukta found that the scam involved major irregularities and systemic corruption.

This gargantuan mining scam, interestingly, unfolded when BJP and its Chief Minister, BS Yeddyurappa, were in power. Though Yeddyurappa and miners came to grief in this case, the exporters got away - largely scot-free. In fact, Karnataka state’s Lokayukta, Justice Santosh Hegde, displaying helplessness, had claimed in a media interview that there was little likelihood that any action could be taken on his long fact-filled report. Justice Hegde knew about the powerful but corrupt nexus that cut across party lines and how it had protectors everywhere - politics, police, media and judiciary.

Expectedly, when the Congress came to power in Karnataka later, many of those who figured in the FIR were not hauled up. A decade later, neither the banks nor the Life Insurance Corporation (LIC) that subsequently loaned colossal funds to one of the accused, Adani, to buy 13 ports and airports did not seemingly do due diligence or pay close attention to the damaging mining probe report. It appeared as if Adani had been given immunity from harm by the government from its past crimes and future indiscretions so that he could grow to be one of the richest men in the world.

In fact, the busting of the mining scandal in 2010 by the Lokayukta backed by the forest department should have been enough to puncture the ambitions of many of those who figured in the list of accused, but it did not play out that way. What is more perplexing is that even when the police team had collected the smoking gun kind of evidence pointing to the criminality against the accused who had been benefiting from illegal exports, neither the law enforcement nor the judiciary booked the guilty.

Justice Santosh Hegde resigned from his position in 2010 after a minister ordered the suspension of a Deputy Conservator of Forests. Hegde was very vocal and said that he was resigning because he felt powerless and helpless to continue his anti-corruption fight as the powers that be within the government would not let him do so. Hegde said at the time of his resignation that Deputy Conservator of Forests, Karwar on the orders of the Lokayukta had seized eight lakh tonnes of iron ore which was illegally transported to Belekeri port. But the Karnataka minister had made a recommendation to the Chief Secretary to suspend the officer and such honest officers will lose their morale if ministers behaved in such a fashion, Hegde had said in 2010 while speaking to the media.

The Belekeri scam had also revealed in one of the seized computer floppies a long list of pay-offs to cops, district administration and customs authorities. So detailed was this list that it was possible to weave together which company mined the iron ore, which truck of a transport company (with registration numbers) ferried it, and the cops and the customs officials (with names) that were paid off. It was all very business-like - as if it was all above board. The same approach ensured that all were greased with bribes that travelled up and down the administrative hierarchy to ensure the illegal cargo moved from the mines to the port uninterrupted and then to bulk carriers to China. To reiterate, all the illegality that drove these businesses was prompted by the insatiable hunger of China for minerals, which had been on a construction spree around the Beijing Olympics in 2008.

It is important to understand the context of the heist that was performed from the iron ore mines of Karnataka and Andhra Pradesh. At that time, BJP was in power in Bengaluru and desperately trying to throw out Congress-led UPA in Delhi, which was worryingly pursuing the links of recent bomb explosions to right-wing Hindutva outfits. Hence, besides profit-making by corporate houses, some of the funds from illegal mining were allegedly used to shore up the fortunes of India against corruption and those opposed to the Congress-led UPA.

Highly placed sources in Bangalore would tell this reporter that funds for the movement to fight corruption in Delhi in 2010-2013 came from Karnataka. There were allegedly meetings between those who had control of illegal iron ore funds and the anti-corruption leaders. These meetings and what was being planned in them were brought to the notice of the Manmohan Singh government in Delhi, but bizarrely, they did nothing. It was visible that Singh’s administration had lost the will to stay in power. Ironically, the UPA lost both legitimacy and power with the help of extremely dodgy money.

In light of the recent expose of the Adani group by Hindenburg Research that raises damning questions about the absence of regulation in the country, the manner in which a colossal quantity of iron ore was stolen and shipped to China provides both evidence and perspective on how billionaires were built. What comes out quite clearly is that the funds from the scam were meant to make the perpetrators richer.

If the BJP and RSS are supporting Adani and draping him in the national flag, then their perception is very different from that of the economic analysts and stock market watchers. To keep Adani safe, they are peddling this theory that his group is a victim of western “machinations”. The recent statement of billionaire businessman George Soros, who criticised Adani and Modi and held out hope that their diminution would be good for democracy in India, is being presented as proof of a grand conspiracy of the West against the Modi government. It is apparent that the last word has not been spoken on the Adani saga.


Sanjay Kapoor is a Senior Journalist based out of Delhi. He is a foreign policy specialist focused on India, its neighbourhood and West Asia. He is the Founder and Editor of Hardnews Magazine. He is a Member of the Editors Guild of India (EGI) and, until recently, served as the General Secretary of EGI.