In early December 2016, the Income Tax Department and the Central Bureau of Investigation in Bengaluru swooped down upon a host of government contractors, engineers, businessmen and bank managers.
On 3 December, seven people were arrested, among them was a government official in Karnataka’s Public Works Department, SC Jayachandra. On 6 December, more arrests were made – that of a businessman called Chandrakant Ramalingam, along with bank officials of Karnataka Bank, Dhanalaxmi Bank and a private cash logistics firm called SecureValue India.
The Jayachandra arrest went on to make headlines – this was the country’s first case of “pink notes” as Rs 5 crores in the rare new Rs 2000 currency notes had somehow illegally made its way into the hands of this group. Jayachandra’s case was the first major catch of money laundering in the wake of demonetisation of Rs 500 and Rs 1000 notes announced by Prime Minister Modi in November 2016.
Who Is Chandrakant Ramalingam?
Ramalingam, an Erode-based businessman is one of the directors of Ramalingam Construction Company, as per the records available with the Ministry of Corporate Affairs. He was arrested in December 2016 and is currently lodged in the Parappana Agrahara jail in Bengaluru.
Ramalingam is now under the lens once again, thanks to the recent political developments in Tamil Nadu – specifically, the ascent to the Chief Minister’s post of Edappadi K Palaniswami, loyalist of VK Sasikala, aide and confidante of late Chief Minister J Jayalalithaa.
Edappadi Palaniswami, who was sworn in on 16 February as Chief Minister, has one son by the name of Mithun Kumar. Mithun Kumar is married to Divya. Divya has a younger sister by the name of Saranya and Saranya’s husband’s elder brother is the aforementioned Chandrakant Ramalingam.
Edappadi Palaniswami himself was not reachable for comment – his phone and those of other MLAs and party leaders in the Sasikala camp are switched off, as they continue to camp in the Golden Bay Resort, ahead of a crucial floor test on Saturday.
Sources close to Palaniswami’s family in Edappadi confirmed to Firstpost that Ramalingam was indeed related to the Chief Minister. “But why are you bringing all this up? They have no connection with the Chief Minister’s family and their business interests are of no concern to the Chief Minister or his family,” said one source who did not wish to be identified.
This comes in the wake of widespread allegations on Palaniswami’s alleged links to river sand mining baron Shekhar Reddy, who was arrested by the CBI in Chennai on 22 December. His arrest followed a raid by IT Department officials in his properties in Chennai which yielded cash to the tune of Rs 136 crores including Rs 20 crores in new currency. Reddy too is currently lodged in a Chennai jail.
Palaniswami has not been available for comments on the alleged links with Reddy either.
The Infamous Jayachandra Case
The country's first case of “pink notes” in black money could well make Prime Minister Narendra Modi thump his chest and narrate the story of how an engineer in Karnataka lived in luxury and yet nothing belonged to him. Every property, moveable or immoveable, listed out was held in somebody else's name.
SC Jayachandra was chief planning officer of the state Highway Development Project, Public Works Department, Karnataka, when the Income Tax authorities raided his premises and hit the “pink jackpot’’ in the form of the new and crisp Rs 2,000 notes, a currency of wonder at that point of time soon after the Rs 500 and Rs 1,000 notes were demonetised.
Neatly laid out on a bed, along with other notes, by the Income Tax authorities, the photograph made many either gape in wonder or get their blood boiling since those were the days of waiting in long queues simply to collect the daily 'ration' of their own hard earned money. The Income tax Department’s press note had pointedly mentioned that the new currency notes of Rs 2,000 totalled Rs 4.7 crores.
The IT raid was a trendsetter in many ways because it was the first in the country to take place soon after demonetisation. For Jayachandra, it was the beginning of another bad month of December. In the same month exactly eight years ago, Jayachandra had been raided by the Karnataka Lokayukta and found to be allegedly in possession of disproportionate assets to the extent of Rs 84.53 lakhs. He was then chief engineer of the Hemavathi project. That case is still pending but the IT raid showed that the amounts, as far as he was concerned, had moved up the value chain.
IT authorities found that he owned or was in possession of four flats in the upscale Rajmahal Vilas Extension’s Pebble Bay apartments, valued at Rs 5 crores. Cash seized was Rs 5 crores in brand new Rs 2000 currency notes with 7 kgs of gold and silver items. Moveable and immoveable properties accounted for Rs 14 crores.
The most interesting aspect has been the various explanations for Jayachandra being in possession of large sums of cash. Take, for instance, the case of the Enforcement Directorate.
The explanation for possession of Rs 27 lakhs, which is inclusive of the Rs 5 lakhs in the new Rs 2,000 currency, appears rather simple. Jayachandra’s lawyers have argued that the amount was an advance amount that had been paid for the purchase of three flats being constructed by a company called Messrs Shakya Constructions and Developers. The partnership firm belongs to Ms Bharathi, wife of Jayachandra, and Thrijesh, son of Jayachandra. The total amount has been accounted for in the name of Purushottam and Devanand, (Rs 10 lakhs each) and a Mrs Rathod (Rs 7 lakhs). (All single names as per the order of the Special court for PMLA cases).
At a point of time when demonetization had zapped all energy out of the real estate industry because of Modi’s dampener on cash transactions, the question that arises is why would anyone pay advance amount for booking a flat in hard currency. Jayachandra’s defence has made a simple point. That the amount was “not proceeds of crime’’ and that the allegations were “false, frivolous and concocted.” The special court, however, felt that it was “inconceivable as to how the accused managed to collect” new currency to the tune of Rs 5 lakhs when an individual could collect not more than Rs 2,000 on a single day.
One of the reasons for Jayachandra to come under the spotlight of the Income Tax authorities was reportedly the lavish lifestyle that his son led. Thrijesh is alleged to have been driving around in fancy, high-end vehicles like Lamborghini, Porsche, Ducati and MV Agusta. For his 26th birthday, the young man described himself as the King and the invitation card, embossed with a silver coin, requested his “royal friends and my countrymen” to a “royal feast of wine and dine on the occasion of your beloved King completing 25 glorious years.” The party was at an upscale pub in the city, Bangalore Mirror reported.
But, the legal argument has been that “he was like many others in his age group just showing off his pictures with the fancy cars.” But that had been used by the Enforcement Directorate to state that he owned all those cars. This has been substantiated by the contention that the cars were all in the name of a contractor who apparently owns 35 similar fancy vehicles all of which, it is said, were purchased in the proper legal manner.
The Special court, however, in its order rejecting bail to Jayachandra had this to say on the possession of Rs 27 lakhs for the purchase of the three flats. “It could be at the most a defence that could be taken by the accused and the same cannot be a ground for considering bail.” The court went on to say that the “accused has not provided any proof in support of his defence.” It has also pointed out that as per Section 24 of the PMLA, “the burden to prove that the proceeds of crime are not involved lies with the accused.” The Court also did not fail to note that the “accused is a wealthy person having political as well as official influence.”
The political and official influence of officials like Jayachandra is fairly well known in the corridors of power in Karnataka. To the point that even Chief Minister Siddaramaiah had to officially deny even knowing Jayachandra.
SR Hiremath, Convenor of the Samaj Parivartana Samudaya, said - “It is clear that such officials are protected by the government of the day. Whether it is the Congress or the BJP government in power, such officials get protection. Jayachandra was one of the officials who was raided by the Lokayukta in 2008. The case is pending because the government has not yet granted sanction for his prosecution.”
And protection “comes because the political class has a lot to hide itself,” said Hiremath, who first came into the limelight when his organisation took the illegal iron ore mining case involving former BJP minister Gali Janardhan Reddy to the Supreme Court.
The Enforcement Directorate case is just one of the cases filed against Jayachandra. The investigation by the IT Department, the CBI as well as the Anti-Corruption Bureau (ACB) into the other assets of the official is still on with some officials complaining of non-cooperation. 17 of Jayachandra’s properties worth Rs 25 crores have been attached by the Enforcement Directorate early this month.
But, the single biggest factor that stands out in this trend-setter of the case post-demonetisation has been put across succinctly by a lawyer – “Everything is benami. There is nothing the poor man owns. Everything has been at his disposal and in his possession but he owns very little.”
Another lawyer, who spoke on condition of anonymity also noted, “The question that needs to be answered is also why would any contractor give away such fancy cars to be used by an official’s son? And, why would the other properties belong to someone else. Or why would some other properties be held in his mother-in-law’s name and why not his own?”
The above questions are not uncommon. But, the fact remains that the journey of cases registered takes a long time to provide justice just like the Lokayukta case against Jayachandra has not shown any signs of conclusion even after eight years. The legal route of the latest set of cases are also bound to take a longer time as the courts await appointment of new judges.
Updated Date: Feb 18, 2017 18:39 PM