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Petition against Naidu threatens to expose the former CM

Last updated on: November 16, 2011 08:51 IST

Petition against Naidu threatens to expose the former CM

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Vicky Nanjappa in Bangalore

The petition filed by the wife of former Andhra Pradesh Chief Minister late Dr Y S Rajasekhara Reddy says that there is no real record to show the income Naidu earned, as his only source of income was from his career as a politician. Vicky Nanjappa reports.  

Chandrababu Naidu, president of Telugu Desam Party, is a worried man today. As the Central Bureau of Investigation readies itself to start a probe against Naidu in connection with the disproportionate assets against him, the man himself is exploring legal options and is planning to challenge the probe in the Supreme Court.

The Andhra Pradesh high court had ordered a CBI probe against Naidu on Monday based on a petition filed by Vijayalakshmi, wife of former Andhra Pradesh Chief Minister late Dr Y S Rajasekhara Reddy. Naidu, however, has a tough task ahead of him in case the CBI starts its questioning.

More importantly, the order has thrown the battle between YSR's son Jagan Mohan Reddy and Naidu out in the open. The two have been at loggerheads trying to expose each other.

The petition against Naidu allegedly exposes the manner in which he made money. It is alleged that he comes from a lower middle class family from Chittoor district and entered politics immediately after he completed his college. It says that there is no real record to show the income he has earned, as his only source of income was from his career as a politician.

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Image: Chandrababu Naidu, president of the Telugu Desam Party

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Naidu alleged to have executed benami transactions to buy property

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Terming him as the biggest betrayer for overthrowing his father-in-law, (former CM) N T Rama Rao, the petition against him states that he went on to earn riches through illegal means.

As per Naidu's own declaration he has inherited 2 acres of agricultural land from his ancestral property situated in his native village of Naravaripalle in Chittoor district by virtue of family partition before 1986.

In an affidavit that was filed after his family partitioned the property in 1986, it is averred by him that he sold his share of the land and bought lands in Nindali and Vakhyam villages of Nellore. Naidu declared his income from the land to be Rs 36,000 per annum.

The fowllowing are some of the allegations made in the petition by YSR's wife:

Naidu is alleged to have started amassing property from Nellore district. He purchased 65 acres of agricultural land through his family members at a low rate of about Rs 1,000 per acre in 1985. Soon thereafter, a further 250 acres was purchased benami (transacted in the name of another person) by him.

The sources of funds for the initial 65 acres, and the latter 250 acres are the same. The entire area of 315 acres is a single stretch encircled by a single farm compound with a fence that runs 12 kilometres.

On August 25, 2001, four transactions of large lands in these tracts were made, which involved Naidu and his son Lokesh. Two of these were gifts, while the other two were sales transactions. Such transactions are clearly suspicious and lend confirmation to the fact that benami transactions were abounding.

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Image: Naidu
Photographs: SnapsIndia
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'Naidu's asset declaration don't match his earnings'

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As chief minister of the state, Naidu made a declaration of his assets in 1999. It showed the value of his assets at Rs 7.83 crore, a massive and inexplicable leap, considering that his agricultural income had been declared only 10 years earlier as Rs 36,000 per annum, while his income as an MLA was Rs 650 per month and as director of heritage foods was Rs 20,000 per month.

The acquisitions in property, which is arithmetically a few times over and above the earlier possessions, in the shortest possible span of business time and equal time spent in political pursuits by the family, clearly indicate that the sources of income that enabled such acquisition of assets were clearly illegitimate and defy an alibi of natural course of events.

In addition to this, the CBI would also probe the benami transaction, which was allegedly undertaken in the name of his mother, apart from the various properties that are found in the name of his wife.

Investigation also needs to be carried out into Naidu's mother Ammanamma's transactions. Admittedly, the only property that she inherited was 2 acres from Naidu's maternal grandparents in Kuppam village.

However, in 2000, she purchased 5 acres of land in Sy No 59 of Madinaguda village of Hyderabad, from one Jasti Panduranga Vittal near Hitec City for Rs 40 lakh and also a plot of 1,135 sq yds in the upmarket Banjara Hills area of Hyderabad for Rs 35 lakh.

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Image: HiTec City, Hyderabad

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'As CM, Naidu selectively leaked policy formulations'

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On October 19, 1994, at the time of publication of the prospectus of Heritage Foods India Ltd, Naidu as managing director declared that he was not associated with any industry or business activity. But at that time, Naidu promoted M/s Bhuvaneswari Carbides and Chemicals Pvt Ltd, and Bhuvaneswari Carbides and Alloys Pvt Ltd. Both these units borrowed from banks and financial institutions, but this fact was concealed in the prospectus deliberately.

It is pertinent to note that the investment made by Bhuvaneswari (wife) and Lokesh in the year 1999-2000 continued till today. M/s A 2 Z E Multisoft Pvt Ltd, which later changed its name to M/s Bizpro Technologies Pvt Ltd, has not been declared in the statement of assets and liabilities submitted to the Election Commission of India and State Legislature of Andhra Pradesh, a perjury liable for prosecution.

It is a mystery as to how Naidu could promote a posh three star hotel in the most expensive area of Tirupati immediately after joining TDP in 1983. Nobody knows how he could mobilise the equity. He later sold this property to another TDP functionary, who was later made Kadapa zilla parishad chairman.

In 1989, a family firm called Rama Agricultural Farms consisting of Naidu's mother, wife, son and a relative P Dasaiah Naidu purchased 3.276 acres of land in Kondapur, at a distance of only half a kilometre from Hitec City, for Rs 1,00,000 at a rate of Rs 30,487 per acre. The sources of these funds remain unknown.

In 1996, an announcement was made by the government headed by Naidu that an infotech park called Hitec City would be established in the area abutting Kondapur. With this announcement, the value of the land held by Rama Agricultural Farms multiplied, providing substantial pecuniary benefit to the holders of the land.

On April 4, 1998, a company named Dr Reddy's Laboratories receives a sales tax deferment of Rs 25 crore for 14 years from the state government headed by Naidu. This was questionable as such exemptions are given only to new industries/units. Dr Reddy's was founded in 1984, and is an established, listed company on both the NSE and the NYSE with revenues of $1.67 billion (Rs 8,350 crore).

Naidu, who was the pivotal policy maker of the state when he was the chief minister, selectively leaked policy formulations of the state in advance for the benefit of individuals and private entities related to him.

The site and location of infrastructural projects envisaged or potential sites for such development was leaked out to the firms and entities owned and promoted by Ramoji Rao, Maganti Murali Mohan of Jayabheri properties and the location and the extents of lands owned by the above named individuals/entities and several others are direct evidence in this regard.

All such favours need to be examined and misuse of power amounting to loss of hundreds of crores of rupees to the innocent farmers and land owners ought to be suitably redressed.

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Photographs: SnapsIndia
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Bid for KG basin gas: Naidu ignored advice by senior officers

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The Krishna-Godavari basin is home to one of the most lucrative gas deposits in the world, as was discovered in 2002. It is estimated to be almost 40 times that of the Bombay High basin.

While the basin is located in the state of Andhra Pradesh, the government under Naidu chose to turn a blind eye to the discovery on its soil, while allowing Naidu's close associate Ramoji Rao to be the vehicle of the quid pro quo.

In fact, there was also a note/letter to Naidu by senior officers in the government cautioning him that the state of AP should also bid for the gas by forming a company like Gujarat had done. This piece of advice was ignored by Naidu.

In the process of exploring gas reserves in KG basin, Reliance industries indulged in many violations by hindering fishermen and polluting large extent of waters, which caused unaccountable damage to environment and marine life.

Ramoji Rao's company Margadarsi Financiers had fallen on hard times in the year 2007 when its irregularities and violations became public. Subsequently a committee of inquiry was constituted by the AP government that revealed that Rs 2,600 crore was collected from public by violating Reserve Bank of India norms and regulations. It was declared that it was impossible for the company to repay its several depositors.

Despite the fact that almost all of Rao's companies were in severe financial difficulties, Rao surprisingly offered through the news media to repay the full amount of Rs 2,600 crore due to the depositors. This was followed by an assurance by him to the court following which the amount due was repaid. A large portion of amount of the so called deposits accounting to nearly Rs 275 crore was declared as unclaimed initially.

In consideration for the favour done by the respondent No. 8 in allowing the state's K G Basin claim to be brushed under the carpet, Reliance group facilitated the payout of Ramoji Rao's debts to his depositors. This was carried out through known associates and friends of Mukesh Ambani.

Two of these known associates of Ambani and the Reliance Group are Nimesh Kampani and Vinay Chajlani.

Kampani extended himself in ensuring that Ramoji Rao would be bailed out. Within a short span of 37 days between December 2007 and January 2008, six "shell companies" were floated on three addresses, which are shown as Sriram Mills Compound, Worli, which is the official address of Reliance Industries Limited. Reliance diverted Rs 2,604 crore of its shareholders money through the shell companies to Ms Kampani's Equator Trading India Limited and Chajlani's Anu Trading.

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Photographs: SnapsIndia
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'Naidu received illegal gratification in several land transactions'

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Between 1997 to 2001, in Palmakole village, just adjoining Shamshabad, Margadarsi Chit Funds (a company in which Ramoji Rao and his family members were partners), along with many of Ramoji Rao's employees with as low income as Rs 10,000 per month bought a huge extent of 360 acres of land, when the market value was just Rs 50,000 per acre.

As agricultural land ceiling was in existence, it was not possible for a single individual to hold large tracts of this land. Rao bankrolled the transactions entered into by his employees in order to facilitate this single piece of land to be transferred.

The fact that this land was purchased at ten times its market price ought to have been enough to arouse the suspicion of the authorities. Shortly after the purchase, Naidu directed the government to grant permissions to benami holders to convert their land to non-agricultural purposes, thereby avoiding the application of the ceiling law in regard to agricultural holdings.

Immediate upon conversion, all the various pieces of land were sold to Ramoji Rao at almost the same price. For example, there were as many as 10 transactions in the name of Kolli Bapineedu Choudhary (now vice president of Ramoji Film City), but not a single land stands in his name now.

In 1996, one Maganti Murali Mohan of Jayabheri Properties/ MM Financiers purchased 2.34 acres in the village of Gachchibowli. These purchases were made for a total consideration of Rs 10 lakh. Murali Mohan is a close friend and associate of Naidu, who was then the chief minister of the state.

Shortly thereafter, Naidu announced the Hitec City Project, which was to be coincidentally located in the villages of Kondapur, Gachchibowli and Madhapur.

Immediately thereafter, the prices of the lands in those villages rose dramatically, which was taken advantage by Murali Mohan who entered into several development agreements (8 projects) between 1996 and 1997 around Hitec City.

Naidu showcased the internationally reputed IT/software/ ITES companies by allotting approximately 1/3rd of 645 Acres in Sy No 65 of Madhapur area fuelling escalation in real estate prices and grabbed the rest of 2/3rd land through a slew of fictitious / benami paper companies at his behest.

The very fact that most of these companies were non IT/ software objective based companies and very few of them just start up software companies incorporated with the sole intention of getting the land and other tax benefits from government of Andhra Pradesh lends credence to the fact that Naidu benefited from the same. In all these allotments, Naidu either received illegal gratification in the form of cash or end beneficiary through Maganti Murali Mohan and others.

For instance, companies floated by one Valluripalli Nagarjun in several names like Valluripalli Agrotech and Arjun Computers and Software got the lands from the government agencies for throwaway prices. After getting allotment, some of the said companies transferred the land to Murali Mohan and his group companies.


Photographs: SnapsIndia
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