Three years and two months after he was sworn in as the first Bharatiya Janata Party chief minister of a state in southern India, Bookanakere Siddalingappa Yeddyurappa was asked by his party bosses to put in his papers. He did not do so gracefully. He left kicking and screaming. Next in line to lose his job is Gali Janardhan Reddy, Karnataka’s minister for infrastructure development, tourism and youth affairs.

The two have been indicted in the strongest possible language in the final report of the state’s Lokayukta (or “people’s ombudsman”), Justice N. Santosh Hegde, on illegal mining and exports of iron ore from the Bellary region of the state.
They are at the epicentre of what is arguably the most brazen scandal in independent India; in certain respects the Bellary scam is more brazen than the second-generation telecommunications spectrum scandal. According to the Comptroller and Auditor General of India, the 2G scam resulted in a “notional” or a “potential” loss to the exchequer that could be as much as Rs 1,76,645 crore. Even if this figure is disputed, the amount represents funds that could have been obtained, money which could have accrued to the government, but did not. In the case of the iron ore export scandal, the amount involved is much lower. Justice Hegde’s report has quantified the loss on account of illegal exports of iron ore from Karnataka, between April 2006 and December 2010, as Rs 12,228 crore.
But there’s a notable difference between what is popularly called the 2G scam and the scandal relating to iron ore mining in Bellary. In the case of the latter, a non-renewable resource belonging to the people of the country has gone for ever. Much of the ore has been exported to China where it has been converted into finished steel products, rods and bars that are part of buildings and stadia in Beijing, Shanghai and elsewhere.
On July 16, 2010, Mr Yeddyurappa had acknowledged in the state Assembly that over 30 million tonnes of iron ore had been illegally exported from Karnataka over a seven-year period between April 2003 and March 2010. The total worth of this huge quantity of iron ore is at least $1.5 billion or Rs 7,500 crore (assuming very conservatively that each tonne of iron ore is worth $50 in the international market). These are clearly under-estimates.
The actual losses are much higher, especially if one considers the way in which the ecology of the region has been ravaged and the livelihoods of hundreds of thousands of families ruined. During the making of a documentary film, Blood and Iron (a film by the writer of this column), one noticed the scale of the devastation caused by iron ore mining and the sharp contrast in the way in which the majority live and the lifestyles of a privileged few.
Bellary, which has a population of around two million, boasts a per capita income in excess of Rs 47,000, well above the average per capita income of Karnataka (around Rs 41,000). However, the literacy rate of the town at 57 per cent stands well below the average literacy rate of Karnataka (around 67 per cent). Large-scale illegal iron ore mining has resulted in sharp economic polarisation by concentrating wealth in the hands of a few while pauperising a large section of the local population by depriving them of their basic human rights and contributing to the widespread pollution of their air and water.
According to the Karnataka Human Development Report of 2005, Bellary ranked 18th among 27 districts in the state. The report added that Bellary was placed the lowest among all the districts in the state in terms of social indicators such as literacy, health and access to drinking water. It pointed out that even though the district is ninth in terms of income among all the districts of Karnataka, “higher income does not automatically translate into an improved literacy and health status for the people if that income is not equally distributed”.
Iron ore mining has resulted in the creation of a nouveau riche class in the region — this can be gauged from the fact that luxury carmaker Mercedes-Benz sold at least 25 vehicles to mining tycoons in Bellary between 2008 and 2009. Prior to 2007, Bellary was considered to be the emerging private aircraft capital of India because it accounted for almost 10 per cent of the all-India market for private flying machines.
What Justice Hegde’s final report has meticulously documented is how the Gali Reddy brothers have used their pelf and power to run the administration and subvert the rule of law. Honest officers have been transferred and any person who has dared to criticise them has been sought to be ruthlessly suppressed. Despite charges of physical violence and a number of non-bailable criminal cases pending against them, the Gali Reddy brothers and their associates have operated with impunity. Among those who dared to defy their writ and were consequently brutalised were a former employee turned whistle-blower V. Anjaneya and rival mine-owner, Tapal Ganesh.
There is a striking similarity between former chief minister Yeddyurappa and Janardhan Reddy. Both came from humble backgrounds and then became fabulously rich. Janardhan Reddy was the son of a police constable from Cowl’s Bazar in Bellary who started a chit fund business which went under. As for Mr Yeddyurappa, in 1965 he was appointed a first-division clerk in the state government’s social welfare department but instead chose to work as a clerk in a rice mill whose owner’s daughter he married. He then set up a hardware store.
There’s another aspect of the iron ore scam that has not been adequately highlighted. Besides the Lad family, which has been implicated in Justice Hegde’s report — mine-owner Anil Lad is a Congress MP in the Rajya Sabha, the Gali Reddy brothers were very close to former Congress chief minister of Andhra Pradesh, the late Y.S. Rajasekhara Reddy and his son, Y.S. Jaganmohan Reddy.
It would not be an exaggeration to say the loot from iron ore mining and exports from Bellary has covertly enriched the two largest political parties in the country.

Paranjoy Guha Thakurta is an educator and commentator