Posted by: John Elliott | June 15, 2012

Andhra Pradesh political corruption hits Sonia Gandhi and Congress

If Y.S.Jaganmohan Reddy (below), a young regional politician in southern India, had not tried to become the Congress chief minister of Andhra Pradesh state immediately after his father Y.S.Rajasekhara Reddy (YSR), who held that job, was killed in a helicopter crash in September 2009, he almost certainly would not be in jail now accused of massive corruption. And if the Congress Party had handled his succession bid more adeptly, it would not have suffered the drubbing from Jaganmohan’s new breakaway party that was announced in state assembly election results today.


Or to put it another way, if Sonia Gandhi, leader of Congress and of India’s governing coalition, had handled the ambitions of Jaganmohan (generally known as Jagan) more astutely, given the material benefits Congress had received from YSR’s and his son’s activities – and if she had not let the ensuing crisis exacerbate demands for Andhra to be split into two states – she might not be facing yet another regional crisis today.

It might seem idle to focus on the events in one state when the steady decline of India’s political and economic affairs, which I have been tracking on this blog for three years or more, has now reached a new tipping point with worsening economic news and chaotic presidential politicking. I am doing so however because the story of Andhra mirrors the story of India’s declining governance and economic prospects under the current government and Congress leadership.

India’s government failings have become so serious that I wondered why Mamata Banerjee, the mischievous West Bengal chief minister and a partner in the coalition, did not go further two days ago when she proposed prime minister Manmohan Singh as a candidate for India’s presidency, thus hinting he should be ousted from the prime minister’s job. Her suggestion of course was rejected by the Congress Party, which announced today it is backing finance minister Pranab Mukherjee for the post. But why not, I wondered hypothetically, suggest that Sonia Gandhi should become president and maybe Manmohan Singh vice president – wouldn’t that have directed Banerjee’s criticisms where they ought to have been targeted?

But to return to Andhra. Here is a state that five to ten years ago was a focal point of India’s booming information technology industry and a symbol of the new India that saw itself growing into a world super-power alongside China. Now it is a symbol of India in decline because of its all-consuming corruption based on political-corporate cronyism, with dynastic ambitions based on personal greed, and the lauding of companies that grow fat on fraudulent land and other deals. Significantly, that personal greed has opened up the corrupt dealings of the embryo YSR-Jagan dynasty. It has also exposed how India’s government manipulates the Criminal Investigation Bureau (CBI), which has focussed on investigating Jagan ever since he became a serious political problem for the Congress Party nationally.

It is hard to believe that 39-year old Jagan’s jailing (below), which was ordered on May 28 for two weeks (later extended to June 25), was not intended to remove him, as it did, from canvassing in the run-up to the elections that took place on Wednesday. As a Business Standard editorial put it on May 31,  “while Mr Reddy may certainly turn out to be guilty, that the CBI has woken up to the strength of the case against him just as his party is in a position to threaten the Congress politically will strike many as further proof that India’s premier investigative agency can no longer even pretend to independence”.

Such are the ways of politics and corruption in India that those who stay loyal to their political chiefs and allies rarely go to prison, whereas trouble makers suddenly find their misdeeds, that had been condoned in the past, being splashed across the newspapers and the police knocking on their door.

Deservedly then, Congress has done appallingly in the results today for 18 state assembly seats and one Lok Sabha constituency where by-elections were caused by the resignations or disqualification of pro-Jagan Congress members. Jagan’s breakaway YSR Congress Party has won 14 of the assembly seats, and the Lok Sabha seat – albeit after voters were bribed with massive amounts of cash, jewellery and other gifts that helped swell the turnout to an astonishingly high total of around 80%.

The result upsets the stability of the current state Congress government and projects Jagan as the possible chief minister after the next state polls due in 2014. Jagan’s jailing probably boosted anti-Congress sympathy votes in his favour instead of preventing him from winning over the electorate, illustrating how badly Congress handles its affairs regionally as well as nationally.


Jagan was jailed after the CBI launched a disproportionate assets case and alleged that he had taken bribes totalling Rs1,172cr (approx $250m) in a series of deals during YSR’s time as chief minister from 2004 till his death.

A skilful regional politician, YSR had worked during his five years as chief minister for the state’s overall development and the rural poor, building an unassailable regional power base and combining that with loyalty to the Gandhi family. This was despite widespread allegations of significant family corruption involving him and Jagan with infrastructure contracts and land allocations in deals done that, reports suggested, were linked to payments to the Congress Party.

Sonia Gandhi and her fellow national party leaders appear to have done nothing to stop these activities, thus mirroring allegations now faced by prime minister Manmohan Singh that he knew about bribery in India’s 2G telecommunications scandal, and most recently, in allegations of massive coal industry corruption, yet did nothing to stop it.

Gandhi and Singh were so committed to YSR that they flew to Andhra for his funeral. There they received Jagan’s succession claim, which was immediately backed by politicians and businessmen who wanted YSR’s son to become chief minister to protect and continue the late chief minister’s deals. Sonia Gandhi resisted the claim, understandably thinking that Jagan was not the right candidate. This sparked a regional political crisis that eventually led to Jagan splitting Andhra’s Congress party and to the corruption investigations against him and other politicians and businessmen.

Jagan had built up media, cement and mining companies with the help of his father, whose corporate links included Satyam, a top software company that crashed in 2008 in a fraud scandal which began to open the lid on Andhra’s crony capitalism. YSR changed the pattern of traditional corruption where politicians and bureaucrats take bribes in return for favours. Instead, he secured the loyalty of supporters by providing business opportunities and land allocations in state irrigation and highway projects, real estate activities, special economic zones, and other schemes, in which the politicians then invested. Instead of just taking kickbacks, he, his family and political associates, became stakeholders – and the beneficiaries allegedly channelled funds into Sakshi, a newspaper business run by Jagan.

The deals spilled over into mining scandals in the neighbouring state of Karnataka. Earlier this month the Andhra government, which is trying to clean its image, cancelled a deal with Brahmani Steels, owned by a former Karnataka state minister and iron ore businessman who is being investigated by the CBI for illegal iron ore mining. YSR’s government allocated Brahmani around 14,700 acres for a steel project and airport along with extensive iron ore mine leases that have not been started. The government is also expected to cancel a major port project in known as Vanpic where 24,000 acres were allocated in return for investments in Jagan businesses.

If YSR had not been killed in the 2009 helicopter crash, it is reasonable to assume that these projects and the corruption and kickbacks would be continuing today, with a grateful Congress Party nationally valuing its firm and valuable friend. No doubt there would have been more corruption allegations and some deals might have come unstuck, but the current crisis would not have built up – and Jagan would not be in jail.


  1. This comment came on The Independent website where the post also appears

    TheLawMap • 16 days ago
    Orientalism ushered in a new era of trying to look at the Orient in a new light. The overriding issues raised in Edward Said’s epoch is very much valid for much of the developing world, including India. Judging the Indian political establishment by comparing it to a western state is likely to cause concern. This is what indigenous Indians are wary of. Add to this the complex jingoistic and at time revisionist history that the opposition parties endeavor to propound, the problem is further exacerbated. Identity, continuity and the political state is still adjusting to the very specific cultural platform that South East Asian countries maintain. There is an immense web of corruption in India as there is in Greece and much of Russia, but each of these states are yet to reach that commonly acceptable post-scarcity plane of USA, UK, Germany and certainly the Scandinavian countries. The Leveson enquiry in UK demonstrated that even in an advanced state where popular democracy has been the norm since 1832 it is possible for collusion to exist between the politician and the self-interested lobbyist. Ultimately, politicians in all countries feel an indomitable urge to cling on to power. The motivation for this might well be the desire for power itself or more materialistic manifestations of power but the desire is the very same. Or maybe, we are just sceptical and the politician still harbours the desire of turning the impossible into possible through the political machinery.

    The problem that has been identified is not an Indian problem but a problem borne of poverty and an inability to do anything about it in the face of a vast wealth creation opportunities.

    Excellent blog by the way!

  2. i think AP government shows his another identity . with corruption….
    this make him different than other state government..
    but don’t worry Anna come soon in tour state……then.. stay tune …

  3. Well done Mr Elliott. Its strange that a foreigner is able to write on this topic with so much clarity and you rarely see such candour from Indian journalists. Only reflects on the ethics of mainstream Indian journalists. The arun shouries, kanchan Guptas of the world are a dying breed. Looks like we will have to import foreign journalists to renew ethical journalism in India.

  4. I wonder at the depth and analysis of the author which is rarely found in Indian journalism. However a few things are to be understood.

    1. AP politics had been set on feudal values since beginning and not new. Indian politics are a reflection of Panchayat only to be composed and edited in stylized Westminster model for the growing English speaking middle class consumption.
    2. The middle class is caught in between, but would tilt to its native position when it matters. A typical English speaking person here would not vote in contempt for the system but would seek refuge in it for personal pursuits. Under stress the values remain native.
    3. India and its neighboring will remain corrupt and those who deal need to know. Wealth creation shall be based in mediocre enterprise or largely deceitful practice.

    The society reflects in Godly values and knowing that they are not for the mortals.

  5. The writer of the article seems to be biased.No doubt YSR during his regime must have made eversomany deals and looted much.But he must remember more than half of the loot went to the kittys of Sonia also or else she would not have allowed him to contnue in the post of CM for long.Again even without herself visiting the Sate during the elctions in 2009 YSR single handedly gave Congress as many as 32 LS seats the maximum by any other Congress CMs in India and also won a convincing victory in assembly elections and became the CM for the second term.Though he was corrupt YSR could influence the farmers of the State much and gave enormous benefits to them and that endeared them to his rule.It is true that he was not much interested in developing IT sector which Chandrababu did but Naidu also was a big looter in all fields and stashed crores in foreign accounts in Switzerland,London banks and also owning a Five star hotel in Singapore in benami name as well started two facories in the name of his wife
    but neglected agricultural sector completely.This led to his downfall in 2004
    from which he has never recovered so far.Naidu during his rule armtwisted Vajpayee by giving outside support and made him a puppet in his hands and could do whatever he liked and Vajpayee closed his eyes in whatever he did for which BJP was completely routed in AP in 2004 and after that has never recovered till date.
    The arrest of Jagan by CBI and questioning him for more than 10 days a thing unprecedented for an agency like CBI and I don’t thnk they have done to anybody and still could not get anything from Jagan and now they want Jagan to undergo Narco analysis test ostensibly prompted by that criminal Chidambaram who was rsposnible for his arrest on the directions of Sonia as she is not able to get money from Andhra which that impotent Kiran Reddy could not get.Kiran like Rosiah does not know anything abt administration and is only a stooge of Sonia.No wonder farmers suffered and coupled with the slow progress in the industrial sector and the arrest of Jagan by CBI for the fault of YSR simply demolished Congress in Andhra.It has always been the policy of Sonia if anybody turns against her using CBI and other agencies to make them to crawl before her while at the same time getting benefits from them.This she successfully adopted in Mulayam,Lalu,now Mayavati cases and made them to surrender to her.This has resulted in Congress trounced in UP,Bihar and wil not recover in the foreseeable future.And the case of BJP is worse.They have been practically wiped out in UP once a dominant party and in Bihar only with the help of Nitish Kumar could make some impact or else they would have lost that also.
    So blaming Jagan is of no use and why they waited till he came out of Congress.It is the ploy of Chidambaram who always used such tactics to please Sonia which he employed against Ramdev by getting him arrested in the midnight when his devotees were sleeping and bundled out Ramdev to Haridwar.If at all the woes Congress is facing it is becoz of Chidambaram who is a master looter in everything but always escape as no courts in India including SC could catch him on any count.He and his son Karti could amass billions with the help of Vadra but Sonia is closing her eyes and CBI and other agencies know this fact never touch them.Why?That is the culture of Congress.So in the next assembly and LS elections Cngress will be wiped out in sevral states and Sonia will lose her power as that is the Law of Nature
    that those who eat salt must drink water. People have become more wiser now and could decipher what is wrong with the lootrs of Delhi and so started to taech them lessons and that is a good trend in Indian politics.

  6. It could not have been better analyzed

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