Upa Lokayukta alleges scam in sugar mill sale

BENGALURU:An inquiry conducted by the Upa Lokayukta has disclosed that a public sector sugarcane factory ‘Bhadra Sahakari Sakkare Karkhane’ in Davangere was auctioned for a meagre amount of Rs 54 crore as against the government bid of Rs 150 crore and a market value of Rs 400 crore.

The successful bidder is ‘Davangere Kabbu Belegarara Raithara Sangha’, which was registered just six days prior to the auction. The factory’s movable and immovable properties include 188.58 acres, several buildings, sugar plant, machinery, boiler, weighing scales and gobar gas plant.

Suspecting connivance of officials behind establishing Raithara Sangha for unlawful gain by participating in bid, Upa Lokayukta Justice Subhash B Adi recommended the state government to cancel the auction proceedings and conduct an investigation through the CID into the formation of the Sangha and the auction proceedings.

The action taken on the recommendations should be submitted to the Lokayukta within a month as stipulated under Section 12(2) of the Karnataka Lokayukta Act, he ordered. He had conducted a probe on a complaint filed by M G Parameshwara Gowda, a resident of Holesirigere in Harihar taluk. According to the probe report, the state government has 60 per cent share in Bhadra Sugar Factory located at Doddabathi, 5km away from Davanagere city.

The sugar factory had to stop crushing sugarcane due to drought in 2004, resulting in borrowing money from banks to meet the administrative expenses and pay salaries. Finally, banks initiated recovery proceedings and obtained a decree in their favour for the factory’s auction.

The state government fixed the highest bid of Rs 150 crore as against the market value of Rs 400 crore as stated by the complainant.The probe report said the sale officer of Davangere DCC Bank, recovery officer and assistant registrar of cooperative societies were hand-in-glove with the bidders and people having black money, and conducted the auction.

Probe found
KIADB sanctioned 168 acres on lease in 1978 and 79 acres for mill
Between 2000 and 2002, factory got loan from banks for working capital
K25.18cr to be paid to banks in 2005
From July 2004, factory stopped crushing of sugarcane
March 2016, bank
had dues of K101.80 cr. It includes dues paid to banks, govt and salary to staff
In April 2015, banks got decree to auction properties
Govt fixed bid for K150cr   
Sugarcane growers’ cooperative society was registered on January 23, 2017. The same got a bid for K54 crore.

MONEY LAUNDERING
The probe said money laundering in the formation of Davangere Kabbu Belegarara Raithara Sangha cannot be ruled out as it has not produced records to show the source of money. But it has provided proof for obtaining K8 crore loan from Davangere MLA Shamanuru Shivashankarappa to pay the initial deposit for auction and repaid the same to him, it said.