Tuesday, October 27, 2009

Jagan Jolted

YSR’s son is rising no more. Naresh Nunna finds out why the high command won’t have him

The Congress has been quietly ignoring the shenanigans of the YS Jaganmohan Reddy camp. Jagan acolytes, scared that their power centres might crumble if the dynastic principle were not upheld, had first threatened to resign en masse. Some even went so far as to tear off Sonia Gandhi’s posters amidst rallies and hunger-strikes – but the Congress called their bluff. On the other hand many others in Andhra Pradesh kept wondering why none from YSR’s own family figured in the 600 “shock deaths” after his helicopter crashed on September 2. Though of course right now what everybody wants to know is not whether these figures were manipulated, but what might lie in store for Jagan. He and his followers minted crores, while the common man was bought off with poorly funded welfare schemes.

“The orchestrated demand for installing Jagan as successor was because YSR loyalists feared losing their power base if anyone else was placed at the helm,” a senior Congress politician told TSI on condition of anonymity. Significantly, Congress spokespersons and senior leaders, including Abhishek Manu Singhvi, Shakeel Ahmed, Jayanti Natarajan and Manish Tewari, have been insisting that the present CM Rosaiah is not a temporary fixture. This is as unambiguous a signal to the Jagan camp as can be – that the man should consider himself out of the race. Incidentally, the income-tax department is believed to have sent notices to companies owned by Jagan and their investor companies.

Jagan’s companies have been making news for all the wrong reasons. For instance a rival of the late YSR has alleged that Jagan leveraged his father’s position to raise money from industrialists in a favours-for-equity quid pro quo. Jagati Publications, owned by Jagan, raised money from business houses such as India Cements (Rs 34.02 crore), Lanco, Eres Projects Pvt. Ltd, part of the Ramky group(Rs 7.77crore), Trident Life Sciences Ltd (Rs.6.8 crore), sister concern of Aurobindo Pharmaceuticals Ltd, Gilchrist Investments Pvt. Ltd (Rs 52.66 crore), Matrix Laboratories Ltd and Hetero Drugs Ltd (Rs 13.12 crore), Karvy group, Pioneer Infrastructure (Rs 19.44 crore) and Sandesh Labs Private Limited (Rs 23.44 crore) of Tanla Solutions Ltd.

When Telugu Desam Party leader and former chief minister N Chandrababu Naidu alleged that there was a nexus between the government and the companies, most of the firms claimed that the investments were made by the owners’ family members in their personal capacities.

“Jagan bought over a sleeping company Sandur Power Generation Ltd in Karnataka and hydel power generation began after his father YSR became CM. The same year Rs 124.60 crore were raised by allotting 1.75 crore shares of Rs 10 face value at a premium of Rs 61 to Mauritius-based Shell companies 2 i-Capital and Flurry Company. In 2005 nearly a dozen companies were floated as subsidiaries of Sandur Power. Carmel Asia Holdings is one of those subsidiaries,” says Telugu Desam leader Nagam Janarthan, who filed a PIL in the high court challenging the allotment of thousands of acres of government land to the Jagan-owned Brahmani Steels. According to him, Sandur Power invested Rs 15 crore in the Carmel Asia Holdings and purchased shares at a face value of Rs 10. “The CM’s son generated Rs 82 crore by divesting 31 lakh shares of Carmel Asia Holdings with a premium of Rs 253 crore (Rs 263 running rate),” he adds.

Jagan launched two other subsidiaries for Carmel – Jagati Publications and Indira Television – and taking advantage of the political clout and interest shown by “opportunistic” industrialists the Jagan clique raised hundreds of crores by hiking the share premium up to Rs 350 per share of Rs 10, he says.

The high command is said to be closely monitoring these, as also Athena Energy, which is planning to generate 14000MW within seven years, and the Rs 6,500-crore Bharathi Cements (earlier Raghuram cements) of Jagan. “The high command understands that the desperation in the Jagan camp is simply due to fears that their fortunes might melt down if Jagan is not made CM. Madam (Sonia) has also noticed this,” say well placed sources in the AICC who monitor Andhra affairs. That puts the biggest question mark yet on Jagan’s succession prospects. According to the same sources, 10 Janpath also sniffed the interests of YSR-loyalists, who are moving heaven and earth to ensure Jagan’s accession.

Senior Congress leaders from Karnataka, including Veerappa Moiley, Mallikarjuna Karge, SM Krishna, Muniyappa and Oscar Fernadez, are also known to be against Jagan, who is a business-partner and close associate of Gali Janardhana Reddy, a cabinet minister in the BJP government in Karnataka. During the general elections Gali Janardhana Reddy was slinging mud at Sonia when she contested from Ballari against Sushma Swaraj. The man had allegedly been funding the BJP campaign from the earnings he made, thanks to the corrupt assistance received in Andhra Pradesh during the YSR regime. It was also alleged that YSR stayed out of the Congress campaign in Karnataka’s Telugu-speaking areas to avoid embarrassing Janardhana Reddy.

Meanwhile present Chief Minister K Rosaiah is being supported by several senior Congress leaders, including V Hanumantha Rao, K Kesava Rao and Uppunutala Purushotham Reddy. Besides, pressure along caste lines is mounting on the high command that Rosaiah should continue as CM. Rosaiah hails from the Vysya community – one that rarely had the privilege of heading a state.
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Source :
IIPM Editorial, 2009
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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