The politics of shady business in Andhra Pradesh

Andhra Pradesh was a pioneering state in grabbing new business opportunities when the economy opened up in the early 90s.

The first set of private gas-based power projects, as well as the country's first privately-run port, came into existence in this state.

The fact that none of these kinds of government-backed private projects were ever awarded through the competitive bidding route right from chief minister N ChandraBabu Naidu's days is testimony to a rot that started early on in Andhra.

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Reddys and Kammas - the two dominant farming communities, amongst others - largely occupied Andhra Pradesh's political power during this period and also became the supply pool for these new entrepreneurs.

It was, therefore, no coincidence that many of the scam-hit names in recent years are from these two communities.

Observers say that with Y S Rajasekhara Reddy as chief minster in 2004, came the next wave of opportunity.

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YSR's thrust on irrigation and other big infrastructure projects saw a manifold increase in public investments across the state and provided these players with thousands of crores of rupees worth of contracts.

Many of these companies, which were in the Rs 1,000-crore league, saw their businesses mushroom to Rs 4,000-5,000 crore, helping them become national players.

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An increase in projects in the state fuelled a sky-rocketing of land prices to such an extent that many started partnering with the people in government for land and land-based projects.

Satyam founder Ramalinga Raju's downfall, allegedly, was his love for land.

The YSR era saw an open partnership between these entrepreneurs and politicians culminating in a CBI probe into his son Y S Jagan Mohan Reddy's disproportionate assets case in which 52 firms and individuals were named in the alleged quid pro quo investment deals.

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The Enforcement Directorate's  provisional attachment of properties of the promoters of Aurobindo, Ramky and the CBI chargesheet against the once-respected entrepreneur and Matrix founder Nimmagadda Prasad, India Cement's N Srinivasan and Penna group's Pratap Reddy, amongst others, are all linked to their investments in Jagan's firms, especially Jagathi publications.

In 2009, Jagathi had launched Sakshi, a newspaper and television news channel by the same name, to take on established media that was ferociously antagonistic to the YSR family. But for the investments in their firms, no beneficiary of the government largesse would have been caught in such a way, observers say.

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The boldness of YSR in conceiving gargantuan projects had both, helped and spoiled a section of entrepreneurial class.

Sri City, a 5,000-acre industrial park located on the Andhra-Tamil Nadu border was the first large private industrial park where the government helped in land acquisition.

Then came the 28,000-acre Vadarevu and Nizampatnam Port and Industrial Corridor (Vanpic) project with Nimmagadda Prasad being at the helm of its affairs.

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This, though, remained a non-starter and subsequently became one of the CBI's biggest cases against Jagan's quid pro quo investment deals.

Yet another 10,000-acre industrial park promoted by the Indu group's Syam Prasada Reddy has already been cancelled by the present government.

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Another troubled company, Deccan Chronicle Holdings Limited (DCHL), which runs the popular English daily, never had a professional management on board, and till Thursday, there hasn't been any explanation as to where all the crores of rupees borrowed from banks have gone.

Nobody other than its promoter, Venkattram Reddy, could explain why P K Iyer, who joined as a general manager in the company, was made part of the promoter group by transferring equal stake to him.

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From Ramesh Gelli, whose Global Trust Bank was accused of wrong financial disclosures by the banking regulator for overexposure to capital markets and large NPAs, to Satyam's Ramalinga Raju and the latest batch of scam-hit names -they were all close to those in positions of governmental power.