The Reddy Tag team 1000 crore Equity as bribes

http://indiatoday.intoday.in/story/ap-ysr-reddy-helped-built-the-kingdom-on-jaganmohan-reddy/1/150496.html

Kadapa MP Y. S. Jaganmohan Reddy may accuse the Congress of a witch-hunt against him. But investigations have revealed that his father, former Andhra Pradesh chief minister Y. S. Rajasekhara Reddy, allegedly abused his official position to help his son build his business empire.

Jaganmohan amassed wealth by pressuring companies to "invest" in his businesses in return for various favours from the YSR Reddy government.

The investigations by the CBI and the Enforcement Directorate (ED) have revealed how YSR, who was the CM from August 2004 to August 2009, acted like a monarch bestowing favours on individuals and entities.

He allegedly doled out mining leases, allotted special economic zones (SEZs) and ports and relaxed norms for real estate projects - blatantly violating norms in the process.

In return, the beneficiaries picked up shares in Jagan's companies

Jagan's blueprint of money laundering was a little unconventional.

He did not park the bribe money that he received in companies owned by others - which is one of the ways most politicians legitimise their illgotten wealth.

Instead, he got companies and individuals, who benefited from the state government's largesse, to buy shares of his companies to mask the inflow of dirty cash as clean investments.

The investigating agencies are trying to unravel the entire network of the private players' investments in Jagan- linked companies - Jagathi Publications, Raghuram Cements or Bharathi Cements, Red Gold Enterprises, Sandur Power Company, Carmel Asia, Silicon Infrastructure, Krishna Power Technologies and Bhagavath Sannidhi Estates - to the misuse of power by YSR.

More than Rs.1,000 crore, suspected to be bribe money, came to Jagathi Publications alone.

The government gave Obalapuram Mining Company (Sajjala group) - owned by S. Divakar Reddy, N. Sangi Reddy and G. Muralidhar - mining licences. Brahmani Steels, a company promoted by the OMC, was given 10,760 acres of government land at a throwaway price on the pretext of constructing a steel plant and an airport.

The OMC bribed Jagan by way of investing Rs.49 crore in Jagathi Publications through several benami companies. Also, a front company of the MP - Red Gold Enterprises - was given 50 per cent of iron ore from OMC mines at cost price. The agencies have got hold of a memorandum of understanding that makes it clear that the sale of iron ore at cost price was for services rendered by Red Gold in getting mining licences.

India Cements, which was raided by the CBI, invested Rs.60 crore in Jagan's enterprises - Rs.5 crore in Carmel Asia Holdings, Rs.15 crore in Bharathi Cements and Rs.40 crore in Jagathi Publications

In return, the government renewed the company's land lease in Kadapa. Besides, the irrigation department gave it permission to draw 10 lakh gallons of water from Krishna river in July 2008 and 13 million cubic feet of water from Kagna river in August 2009.

The investigators have dug out details of the investments made by 11 persons into Jagan- owned or associated companies. The ED says these are nothing but bribes paid for allotment of SEZ lands, contracts of irrigation projects and special relaxation/ permission for real estate ventures and mines.

 For example, the ED alleged that M. Srinivasa Reddy and G. Srinivasa Raju, both from Hyderabad, paid Rs.2.25 crore and Rs.4.6 crore respectively, A. K. Dandamudi of Secundrabad paid Rs.10 crore, K. Srinivasa Naidu of Hyderabad gave Rs.10.82 crore and M. Ramachandra of Bangalore Rs.19.6 crore.

The probe has also thrown up names of 22 paper companies - registered in Mumbai, Kolkata, Delhi, Bangalore, Guwahati and Rajkot - to channelise slush money. ED officials said through these front companies - including Bay Inland Finance, Gromore Fund Management and Ispat Sheets - Rs.195 crore was pumped into Jagathi Publications - by way of picking equity shares at a premium of Rs.350 per share - between 2008 and 2010.


"Except these beneficiaries, no one other person bought shares in Jagathi Publications at premium rate. Thus, it is alleged that they are the result of illegal gains from the office of the CM and other persons holding important positions in the government," the ED said.

 http://fraudex-2012.blogspot.com/2011/11/reddy-tag-team-equity-as-bribes.html