Karnataka Lokayukta justice Santhosh Hegde's report on illegal mining in the state has not only cost BS Yeddyurappa his chief minister post, but also exposed how Gali brothers looted the state through their OMC and other mining companies. The report says that the state govt has completely failed in curbing illegal mining over the past several years. The unfair practice has resulted in illegal shipping of 2.98 crore metric tonnes of iron ore valued at whopping Rs 12,228 crore between 2006 and 2010.

The 464-page report, which comprises observations and recommendations of Lokayukta justice Santosh Hegde, has 32 chapters. There are separate chapters on dubious financial transactions, involving Chief Minister Yeddyurappa and his family members,  the Obalapuram Mining Company (OMC) owned by Tourism Minister Janardhan Reddy, Matha Minerals of Housing Minister V Somanna, devious ways in which goons in Bellary used to mine and export iron ore, iron ore theft at Belekeri port and collapse of administration in Bellary.

According to the report, the highest quantity of illegal export has been recorded in 2009-10 when 1.27 crore metric tonnes of iron ore mined in the State was exported. The investigative team, however, has not been able to trace the destination of 32.44 lakh metric tonnes of iron ore illegally exported during the four years. Iron ore exported from Goa ports has not been computed. Janardhan Reddy-owned OMC exported 71.61 lakh metric tonnes of iron ore from Karnataka though the company does not have any mining lease in the State. It has mining leases in neighbouring Andhra Pradesh. Ironically, the company exported only 2.17 lakh metric tonnes from its lease area in Andhra Pradesh between 2006 and 2010.

As many as 83 exports of iron ore with a quantity of 17.58 lakh metric tonnes have been found in various ports after the government banned the export in July 2010.  Maximum exports were done from Krishnapatnam and Belekeri ports which are administered and managed by private companies.
The report has details of all 83 exports. "This specific matter requires further investigation for finding out illegalities and persons responsible," the report stated. A large quantity of iron ore was transported to ports from lease areas without any permit or with forged permit between 2009 and 2010.