CVC seeks inquiry into Jagan Mohan Reddy's business

NEW DELHI: Investigations into the business affairs of YSR Congress president Jagan Mohan Reddy and the Janardhan Reddy-led Obulapuram Mining Co. may be stepped up another notch, with the Central Vigilance Commission (CVC) calling for an inquiry. The move could muddy the waters further in Andhra Pradesh, which is divided over plans to break up the state amid elections that have to be held this year.

The agencies currently inquiring into the cases against Reddy such as the one on disproportionate assets are the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED). The CVC, which has ordered a detailed inquiry into "irregularities and malpractices" in the allotment of public resources in Andhra Pradesh, has also sought to rope in market regulator Securities and Exchange Board of India (Sebi) and the ministry of corporate affairs (MCA) to closely examine Reddy's investments.

Reddy and Obulapuram Mining have come under the CVC scanner for allegedly gaining benefits from the public allotment of land, special economic zones (SEZs), mines, ports and industrial estates. Obulapuram is already part of the CBI's current investigation of illegal iron ore mining.

The vigilance case is being pursued after member of parliament Nama Nageshwara Rao of the Telugu Desam Party complained to the commission against Reddy and Obulapuram.

"The commission observes the matter relates to organized economic crime with many tentacles and it needs close monitoring," the CVC said in a letter to investigation agencies, a copy of which ET has reviewed.

The CBI and Enforcement Directorate have been asked to coordinate the work of the various teams looking at different cases to check for linkages and see if any money laundering has taken place through the foreign direct investment (FDI) route. The MCA and Sebi have to investigate the aspects of "funds transfers, investments and corporate governance behind the veil in the entities figuring here."

An email sent to Reddy and OMC did not elicit any response.

Any move to widen the probe against Jagan Mohan Reddy could buttress his accusations of victimisation against the central government. The son of the late YS Rajasekhara Reddy broke with the ruling Congress party because he wasn't made chief minster to succeed his father when he died in a helicopter crash in 2009. Currently campaigning against breaking up the state, he is engaged on a United Andhra yatra. That also pits him against the Congress, which is committed to the creation of Telangana state.

Most of the cases against Jagan Mohan Reddy stem from the dramatic surge in his assets during his father's tenure as chief minister between 2004 and 2009 and subsequently.