YSR's 'sheer size' of corruption shocked US diplomats

New York: Deceased Andhra Pradesh chief minister YS Rajasekhara Reddy's populist schemes kept him comfortably in power from 2004 to his sudden death five years later, but they were also conduits for massive corruption, US consul general David Hopper, then based in Chennai, wrote in a confidential cable newly released by WikiLeaks.

Hopper's damaging cable comes on the back of a CBI inquiry into the wealth amassed by Reddy's businessman-politician son, Kadapa MP YS Jaganmohan Reddy, who is the leader of the YSR Congress Party. Last month, the Andhra Pradesh High Court ordered a wider CBI probe into alleged kickbacks Jaganmohan Reddy received from some 30 companies, including Emaar Properties, Ramky Infrastructure and Pennar Aluminum for sweetheart deals he wrangled for them from his father’s government.

The cable says Reddy’s big-ticket social programmes to do with irrigation and building houses for the poor were mired in nepotism, shadiness and profiteering. Screen grab from ibnlive.com

Corporate and political India have long benefited from each other in navigating a business climate rife with deep-rooted patronage systems, but Hopper claims the Reddy-led Congress government indulged in an unthinkable level of corruption which defied even "the norm for India."

The cable dated 22 October 2007, gives the diplomat's frank assessment of allegations of widespread corruption among Andhra Pradesh's ruling elite. He says Reddy's big-ticket social programmes to do with irrigation and building houses for the poor were mired in nepotism, shadiness and profiteering. The diplomat puts the cost of Reddy's ambitious Rajiv Swagruha Programme aimed at building 16 lakh low-cost houses in the state at $4 billion to $6 billion. The 26 new irrigation projects he envisaged were expected to cost the state nearly $11 billion.

"There is consensus in Andhra Pradesh that irrigation and housing programmes are beset with corruption. On separate visits to Hyderabad, we heard allegations of widespread graft from several neutral observers," said Hopper’s cable.

"An economist, who is studying the effectiveness of the state government's programmes, said with only four to five companies executing the projects through numerous subcontractors and little oversight, there are many opportunities for graft in the irrigation schemes."

The US cable also pointed out that the chief minister and his party took a bigger cut from promoters wanting to put up multi-crore projects in the state. "Typically, five to seven percent is lost to corruption, but in Reddy's irrigation programme that figure is more than 15 to 20 percent," said the cable. "The sheer size of Reddy's signature programmes, with literally billions of dollars at play every year, leaves much room for 'leakage' to Congress party officials and their allies."

"We thought Naidu was bad, but that was child's play compared with what is happening now.”

Hopper told his bosses in the US state department that widespread corruption in the Congress government seemed to be an "open secret" in Andhra Pradesh.

Updated Date: Sep 16, 2011 11:33 AM

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