Does the large scale purchase of cotton seed by Karnataka Milk Federation (KMF) have anything to do with the sourcing of cash for allegedly securing bail for jailed mine baron Gali Janardhan Reddy in the illegal mining case?

Sources in the KMF did not rule out this possibility as the KMF chairman is Janardhan Reddy’s brother and Bellary City legislator Somashekhar Reddy.

He is now in the custody of the Anti Corruption Bureau (ACB) in Hyderabad as one of the accused in the ‘cash-for-bail’ deal.

The doubts arose as large scale cotton seed purchases were made for KMF by Mr Somashekhar Reddy in May this year, just before he was arrested by the ACB, said sources.

Not only did he make the bulk purchase, which was reportedly not required for the cash strapped KMF, the seeds were purchased at double the market price, claimed the sources.

The result: KMF is set to lose over Rs 25 crore which sources said, was utilised to finance the ‘bail deal’ through a businessman from Guntur.

For meeting their cattle feed needs, KMF need 3,500 tonnes of cotton seed every month. The price of cotton seed ranged from `12,000 to `16,000 this year.

However, Mr Somashekhar Reddy placed an order for more than 29,000 tonnes of cotton seed in July, in two instalments.

In February, KMF had invited tenders to supply 21,000 tonnes of cotton seed and the lowest price was Rs 12,800 per tonne. Subsequently, the tender was cancelled.

Later in May, another tender was invited to supply 20,000 tonnes of cotton seed, in which Rs 13,800 per tonne was the highest bid. This time, KMF purchased only 1,500 tonnes of cotton seed.

On July 12, KMF invited another tender to supply 23,000 tonnes of seed and placed an order for 14,100 tons. The price this time was Rs 20,650 tonne. At that time, the market price of cotton seed was Rs 13,000 per tonne, sources said.

Later on July 27, KMF invited another tender to supply 15,000 tonnes. This time, the price was Rs 27,100 per tonne, while the market price was only Rs 15,500 per tonne, sources pointed out.

The issue has reportedly come to the notice of some KMF directors, who have approached the cooperative department principal secretary, urging him to stop payment for the cotton seed supplied at this exorbitant price. The price differential works out to more than Rs 25 crores, the sources added.

‘Reddy only an accused’

Defending Karnataka Milk Federation (KMF) chairman Somashekhar Reddy’s continuation in the post despite being sent to jail in the Cash for bail scam, cooperation minister B.J. Puttaswamy said Reddy was only an accused in the case with the court not pronouncing him as an offender.

When asked about the future of KMF with its president in a Hyderabad jail, Mr Puttaswamy said there were no legal hurdles to the day-to-day functioning of KMF.

When asked if there was any move to change the KMF chairman, he said there was no such proposal before him.

When asked about the recent scam in KMF where officials had allegedly purchased cotton seeds at a much higher price than the market price, Mr Puttaswamy said he had also heard about the incident. “I have called for the files.

It is said that while purchasing cotton seeds for manufacturing cattle feed, a higher price was paid. The market price was Rs 16,500 per tonne while KMF placed an order to purchase 30,000 tonnes of seed at Rs 32,000 per tonne. I will take a decision on this after going through the files,’’ he said.

When asked about Mr Somashekhar Reddy executing the purchase order from jail, the minister said that he would look into the matter. “Soon, I will be calling a board meeting of KMF to discuss the issue,’’ he said.

Loan waiver: Puttaswamy challenges Cong

Co-operation minister B.J. Puttaswamy has challenged Congress leaders of Karnataka to impress upon the Centre the need to waive crop loans availed from nationalised banks like the state government had written off co-operative loans of farmers amounting to Rs 25,000.

He said the move would cost the state exchequer Rs 3500 crore. If the Centre waives the loans availed from nationalised banks, it will have to bear a burden of over Rs 19,000 crore.

At present, 6.71 lakh farmers had availed crop loans of Rs 25,000 while 8.93 lakh farmers had availed loans above Rs 25,000 at 1 per cent interest.

When asked if the cooperative societies will get government compensation for the waiver in one go or in instalments, Mr Puttaswamy said the government will make the reimbursement whenever farmers avail the facility.

“There is a government mechanism and we will manage that,’’ he said, and refused to elaborate on the government’s plan to tide over the financial burden and said that it was mainly interested in helping out farmers. “For cooperative societies, NABARD will provide the funds,’’ he added.