The Indian Express in its story has given commendable details about how the loans were sanctioned to the sugar factories owned by Congress leaders namely Laxmi Hebbalkar and Ramesh Jarkhiholi.
The article states –
Two sugar factories, one owned by a minister in Karnataka’s Congress government and the other by the president of the party’s women’s wing of the state, are under the scanner of the income tax (IT) department in connection with loans adding up to over Rs 530 crore given to them by a group of co-operative banks led by the Karnataka State Apex Co-operative Bank.
In searches of properties— including the two sugar factories — linked to the two Congress leaders on January 19, the IT department had found the leaders to be holding Rs 162 crore in undisclosed assets.
The department is investigating whether unexplained funds in the accounts in some co-operative banks were transferred to the two factories as loans.
Filings with the Registrar of Companies show that Soubhagya Laxmi Sugars Ltd, a sugar mill started in 2008 by Karnataka’s Minister for Small Scale Industries Ramesh Jharkhiholi, got loans of Rs 318 crore from the Karnataka State Apex Co-operative Bank-led consortium after the Congress government came to power in 2013.
Filings for Harsha Sugars Ltd, started in 2014 by the president of the Congress women’s wing Laxmi Hebbalkar, show that the under-construction mill received a Rs 215 crore loan in 2015 from almost the same group of banks.
The 23-member board of directors of the Karnataka State Apex Co-operative Bank is headed by Congress MLA K N Rajanna, and has on it five other Congress leaders along with the heads of other co-operative banks in the state.
The IT department in an official statement said that investigations had so far “confirmed that huge unexplained cash deposits have been made in the bank accounts of family members and associates and in benami names in primary cooperative societies which were transferred to business entities carrying out sugar manufacturing”.
The statement also said that “Evidence of creation of bogus assets and siphoning off money from the company through various concerns engaged in turnkey projects for setting up of sugar factories have also been gathered.”
Documents filed with the RoC by Harsha Sugars for borrowing Rs 215 crore in October 2015 — shortly after the investment was cleared that June by a high-level clearance committee headed by Chief Minister Siddaramaiah — show that the firm mortgaged around 51 acres of land in Savadatti in Belagavi against the loan.
Harsha Sugars sought the loan to set up a 5,000-tonne plant with a 30 MW co-gen power plant at survey No. 411 in the same village.
The Apex Bank contributed Rs 50 crore to the loan; Bagalkot District Central Co-operative Bank gave Rs 40 crore; South Canara DCC Bank Ltd, Rs 30 crore; Bijapur DCC Bank, Kanara DCC Bank, and Tumkur DCC Bank, Rs 25 crore each; and Bajpe Vyavasaya Seva Sahakari Bank, Rs 20 crore.
Soubhagya Laxmi Sugars, owned by Minister Jharkhiholi, got a loan of Rs 318 crore in four parts between mid-2013 and early last year.
It was sanctioned Rs 60 crore in February 2016 by the Apex Co-operative Bank for the sugar season 2015-16 against a mortgage of the plant and some 126 acres of land in the Hirenandi village of Gokak in Belagavi district.
Earlier, between September and November 2014, the company had received Rs 120 crore from the Apex Co-operative Bank-led consortium: Rs 30 crore each from South Canara DCC Bank Ltd and Bijapur DCC Bank; Rs 25 crore each from Kanara DCC Bank and Tumkur DCC Bank; and Rs 10 crore from the Apex Co-operative Bank.
The loan was given to increase the plant’s capacity from 3,500 tonnes to 7,000 tonnes, and co-gen power production from 18 MW to 36 MW. The firm pledged 200 acres of land and the factory after getting no-objection certificates from State Bank of India, IDBI Bank, and Andhra Bank, to whom the property was already pledged.
Before that, in June 2014, Soubhagya Laxmi had got a loan of Rs 45 crore — Rs 35 crore from the Apex Co-operative Bank, and Rs 10 crore from two smaller Gokak co-operatives — to set up a 45 kilolitre-per-day ethanol plant. And in July 2013, it had got a Rs 93 crore loan from the Apex Co-operative Bank.
The IT department has alleged that the two Congress leaders “followed almost similar modus operandi for tax evasion” through the use of “common entry providers/facilitators”. The department, under the Directorate General of Income-Tax (Investigation), Karnataka and Goa region, conducted searches at locations linked to the two leaders in Gokak, Belagavi and Bengaluru on January 19. The search “led to admission of undisclosed income of Rs 162.06 crores”, the department said in an official statement last week.
Minister Ramesh Jarkhiholi has said the investigation was aimed at tarnishing his image.