Scrap Mafia: Last week, I wrote about small time hoodlums, the type you can swat like flies if you have a little local connect or are willing to report them to local authorities. The scrap mafia is a different ball game! Welcome to the Gangs of Wasseypur (Bollywood Movie) where murders, extortion, physical violence and intimidation, corporate, political and police corruption run rampant. You don‘t only need a set of big balls, but also brains to be in the collection side of this business.
12th October, 2017: My phone rings waking me up from a deep sleep. It‘s 1:30 am in the morning and the call is from my supervisor from Bangalore. I have always been wary of getting work calls at odd times such as these, as more often than not, only occur when something bad has gone down. I answer the phone with a groggy hello and on the other side, I hear my supervisor crying, asking me to save his life. Before I can compose myself, someone else jumps on the phone and asks me to come outside the warehouse of a large e-commerce company within thirty minutes or the supervisor will be face grave consequences. Fuck, I am in bed at my home in Delhi, this guy wants me to show up in Bangalore within thirty minutes or him and his boys are going to go town with my supervisor who belongs to a small town in Bihar.
We had just secured a large contract to manage the waste generated from the warehouse of a large e-commerce company and despite getting threats on numerous occasions, I had taken an executive call to continue with the contract, after all we were used to such elements and had dealt with them in states like UP & Haryana, and this was Bangalore, my thoughts were that nothing serious could come of this. All those beliefs come tumbling down over the next few days as we encountered the wrath of the Bangalore scrap mafia with deep political connects.
The scrap mafia is ever present, especially in the areas where there is bulk generation of recyclables. Railway and other government tenders, large manufacturing units, E-commerce and other large warehouses etc. If you take look at where most of the large industries and warehouses are located in India, you will find that they are mostly in rural areas on the outskirts of large cities. Tier two and three cities have many such industries where locals have either sold their land to large companies directly or through the government or in some cases leased parcels of land by building warehouses on them to large national and multinational organizations. Once land is sold or rented most of these individuals in rural India either enter local politics or the business of property dealing. Along with that they also start exerting their control on whom the company can and cannot sell their scrap too (they also control the movement of construction materials, water, transportation) and the rates that they can sell their material at. They do this through intimidation both physical and political. In the case of physical intimidation, they would first start off by calling you and harassing you verbally. If that fails, they would show up at your office or facility, hold up your trucks or threaten your employees with dire consequences. As they are from the local region, the police know them well and it‘s easy for them to collect people in masses from their village as support, not to mention their political contacts are ever willing to help.
On the political (many local politicians are directly involved in the scrap business) side support is provided by local politicians on the pretext of keeping outsiders at bay and give the opportunity to locals in the area to earn while generating employment. The truth is that all this is done to make money, while benefiting only a handful of individuals, most of whom are well to do anyhow. There is also a massive involvement of employees working in many of these companies for personal financial gain, which I shall speak about in next weeks newsletter. In majority of the cases local politicians/mafia don‘t get involved in the process of collection, transportation or processing directly. They have local scrap dealers do all the work. These individuals then pay a fixed fee or a per kilogram fee as protection money that is then distributed amongst local goons, politicians and police. In essence, the local scrap mafia is a middleman, ensuring that rates are kept low, outsiders remain at bay and companies tow their line. It‘s a great way for them to earn hard cash, part of which then fund political campaigns and life style.
Large companies such as LG, Samsung, Yamaha, Vivo, Oppo, Flipkart, Amazon, Future group, Arvind, Mahindra, Tata, McGrawhill, the Indian railways and many more are under the grip of the local scrap mafia. Let‘s take LG for example. The company has a manufacturing unit located in the city of Greater Noida since 1998. For the last twenty years the contract to collect scrap has been firmly in the grips of one individual family, that‘s supported from the outside by the likes of the Sundar Bhati Gang and the local police and politicians. Two murders have taken place over the contract of scrap for the said company, with the individual who has been collecting scrap from this facility for over a decade being charged under the gangster act, yet its business as usual. At his daughter‘s wedding, two years ago a total of two crore of cash, over fifty lac of jeweler and three Audi cars were presented to the groom‘s family as a gift. When you work in Greater Noida, there are certain companies that you just stay away from for your safety, LG is just one such company in a list of companies that is long. It‘s just not scrap, it‘s the entire ecosphere that‘s controlled by the local mafia. From transportation of goods, busses that transport employees, supply of construction materials, hiring and firing of local employees the mafia has a big say in company decisions.
Another recent example is OPPO, where in the beginning of this year a security guard of the company was shot dead by an aid of the Sundar Bhati Gang over contracts relating to scrap, supply of drinking water and construction material. Across the country from Bangalore, Mumbai, chennei, Kolkata, cities in Haryana, UP, it‘s the same situation. From controlling rights to segregate and recover recyclables from landfill dumps to controlling the scrap trade from large, midsize and small companies, this is well oiled nexus between politicians, local authorities the mafia and employees of certain private companies. Money from the proceeds is used to fund political campaigns, bribe the police for protection and fund small developers in the real estate market.
The recent boom in the countries E-commerce market has caught the eye of regional mafia groups. The story at the beginning of this article relates to one of many such instances where local mafia has started to make inroads into the E-commerce sector across the country. Housekote, in rural Bangalore has many large warehouses, including those of prominent E-commerce companies and the presence of the local mafia is ever present and growing in terms of controlling the scrap business. Either you work with them on their terms or you don‘t work at all. In Bangalore, the scrap business from large warehouses is controlled by locals affiliated with national or regional political parties. They either are directly involved in politics or have someone in their family or friend circle who is engaged in the business of politics. There have been a few companies from outside of Bangalore who have tried to work in Bangalore scrap business, with all of them forced to work with regional mafia players, by outsourcing the work to them or their henchmen. We are the only North Indian company that has set up operations in Bangalore in the year 2015 and continues to work there till date. Large players like Ramky on multiple occasions have dipped their fingers in this business of collecting scrap from large E-commerce ware houses and failed, due to many reasons, one of which being the involvement of regional mafia players. The truth is that in most cases the contract may be in the name of reputed or may not so well-known company but it‘s being serviced indirectly by the local goons. (Read other reason of why this happens)
We have serviced each and every large E-commerce player across India and in the city of Bangalore and as a result have had numerous run ins with local mafia figures, who have continuously tried to upend our business mostly through intimidation and cartelization. What has worked for us is supporting the local economy by financially assisting local strong men, not by giving them money, but by renting land from them to build a warehouse, renting rooms from them to house our employees and staying as far away as we can from hiring locals either as supervisors or drivers. All our employees are hired in UP and sent to these cities to work. Even though we don‘t service many of these warehouses any more, mostly due to reasons mentioned in this article, we continue to get most of their recyclables delivered to our warehouse, which saves us tremendous money when it comes to reducing our collection and labor costs.
Mumbai, Kolkata, most parts of UP and Bangalore are notorious for Mafia involvement. Bhawandi, located in the state of Maharashtra is one market that we have not been able to crack without outsourcing work to locals and on many instances have had to walk away from contracts. From future group to H&M, from Flipkart to Amazon, they are all being serviced by local goons in Bhawandi. The company may be able to help you within their premises (Happens rarely) but it‘s what happens when you leave the premises of the company that is of serious concern. In one such instance, our loaded truck with cardboard was forced to stay within the premises of large E-commerce company in Kolkata, as over thirty men waited outside the gates of the company to give our truck, driver and labor a very special welcome. We had to fly one of our employees to Kolkata to negotiate terms and after days of negotiation we reached a pact and were allowed to service the said facility through outsourcing the work to locals who belonged to a TMC (ruling political party in the state of Bengal) faction. In other instances, we have seen first-hand goons‘ barge into warehouses and threaten the manager and employees of dire consequence. In many instances a complaint is not lodged out of fear and in some cases its due to corruption within organizations. Those working in India know very well how the police works. In my personal opinion and through experience what we have found is that the police play a role of a mediator after the incident has occurred and in rare cases may act prior to the crime being committed. There are many reasons for this, from political intervention to not get involved, to corruption and also the fear of locals creating a problem.
The nexus between local and central politicians, police and employees of some corporations and companies has ensured that only those with coercive vested interests stand to gain. Life is not fair, and that‘s the system that we operate within in the scrap market. You can either standup to them, join hands with them or quit. That‘s said, there still remain many companies where you can secure scrap contracts, but that comes with its own set of challenges that we shall cover next in next week‘s newsletter.
As far as the story at the start of this article is concerned, our supervisor escaped on foot and hid in the nearby bushes for a good four hours. He only left once the commotion our side settled. For the rest of the month he stayed in his room our fear only to come out once we sorted the said matter. How did we sort the matter? We have a couple of problem solvers in our organization who due to necessity have become experts in dealing with such situations. One was dispatched to Bangalore on an early morning flight the same day, the other a women and key employee of our organization worked the phone to garner local support to counter the offensive. Calls were made to our landlord where we rented rooms for our employees, where we built our warehouse, to individual who supplies up water (a local congress party strong man) to the individual from whom we rent our generator from and they were told that there will no more business from us if the situation at hand is not resolved. We were after all paying them money every month and that took over the prevailing market rates, it was in their interest to ensure that our business and employees remained safe. For over a month our trucks were accompanied by locals from the area to ensure their safety and that of our employees, on occasions there were heated confrontations between them and the local mafia goon, but in the end a resolution was arrived at that we would be allowed to work the contract for a period of few months post which we would need to let go of it. That was enough time for us to make inroads into the local market to help strengthen our arms.
The Bangalore and certain other market was starting to get big for us and it was important that we had our own safety network in place to counter any future episodes of such kind, so we decided to give birth to new local entrepreneurs who would work as sub vendors for us. Like only a diamond can cut a diamond, only locals can deal with local goons in their own way. Many of these individuals continue to work with us till date and some have grown their business to a respectable size, with one of them becoming one the largest in the region. We still get majority of the waste from these warehouses, only we don‘t do the collection, it‘s now delivered to our warehouse hassle free. The point to note is that the mafia element involved here holds the contract in his name and has subcontracted the contract to the vendor who then sells the scrap to us. Similarly, in other warehouses where the contract is in the name of an outside party from a different city, the contract is executed on the ground level by locals some of whom continue to sell their scrap to us.
Collection of waste and scrap remains one of the most pressing challenges faced by the waste management sector in India. With the government now realizing that there is wealth in waste the battle has moved towards controlling the ownership of waste. The recent EPR draft, prevailing tendering policies and the government dragging its feet on giving the sector industry status and showing little interest in implementing transformational policy changes are efforts to maintain status quo.
On the scrap side the business as detailed throughout this article remains mostly controlled by regional and local mafia, with collection being one the most pressing challenges.
Here are some links detailing the names and notorious characters involved in the business of scrap in India:
1. Attack on Oppo (Greater Noida)
2. Gangsters & The Scrap business
4. The Scrap Mafia Queen of Mumbai
6. Garbage Gangs of Deonar: Mumbai
7. Bloody Gang Wars: UP: Bihar: Bangal
8. The Iron Mafia: Video Documentary
10. Chennai 250 Crore Scrap Mafia Don
11. Noida &Greater Noida Sunder Bhati Gang
12. Ragpickers Shanties Destroyed
13. Rising Crime In Noida & Greater Noida
14. The Enemy Within
Next weeks newsletter will cover the involvement of corporates and government employees bringing together the entire syndicate by connecting all the dots.
Hope you have enjoyed this weeks newsletter. Until next week, have fabulously sustainable weekend!