In unprecedented scenes in Tamil Nadu, the Income Tax department, on Wednesday, raided the residence and the office of Chief Secretary P Rama Mohana Rao. The searches that began at 5.30 am at his house in Anna Nagar, an upmarket locality in south Chennai, went well into the evening.

In perhaps a first, sleuths also entered the chief secretary’s office at the secretariat and were seen loading files into a truck late in the evening. There was extreme secrecy around the operation. The IT sleuths avoided the state police and came with central paramilitary protection when they knocked on Rao’s doors, raising questions on whether the state government was informed about the operation before it began.

On Wednesday evening, J Shekar Reddy, a sand mining contractor known to have connections at different levels in the government, was arrested by the Central Bureau of Investigation. Officials at the investigation agency said cases have been booked under both Prevention of Corruption Act and Money Laundering Act. The application of the Prevention of Corruption Act points to the widening of the net, with the CBI expected to act against bank officials who aided Reddy in converting demonetised currency into fresh notes.

Last week, Reddy’s houses were raided with officials claiming to have recovered Rs 34 crore in new Rs 2,000 notes and a whopping 117 kilograms of gold in the form of biscuits. Given that the arrest and the searches at Rao’s residence and office happened on the same day, the media has speculated a link. IT officials said about Rs 30 lakh in new currency and “significant amount of gold” has been found at Rao’s house, though there was no confirmation on whether these were seized as unaccounted wealth. At the raid in Rao’s son’s house in Thiruvanmiyur, officials claimed Rs 5 crore was seized.

Union Minister of State for Commerce and Industry Nirmala Sitharaman told the media at Madurai that the raids were based on specific inputs received by the IT department. She refused to elaborate on what these inputs were.

The searches and arrests have sent shockwaves through Tamil Nadu’s political class and bureaucracy. This also comes just three months after another top civil servant, former chief secretary K Gnanadesikan, was suspended by the state government for alleged corruption.

Wednesday’s developments also had national ramifications. West Bengal Chief Minister Mamata Banerjee was quick to slam the raids and dubbed them as vindictive action by the Narendra Modi government.

Powerful officer

Apart from being the top bureaucrat in the government as its chief secretary, Rao was known to be close to the All India Anna Dravida Munnetra Kazhagam leadership. In 2011, when former Chief Minister Jayalalithaa returned to power, Rao was appointed as chief minister’s Secretary-1 (in all, there are four). This position is usually reserved for bureaucrats considered trustworthy by the ruling party. In Tamil Nadu, the position is considered as important as that of chief secretary’s as all decisions are made almost single-handedly by the chief minister’s office.

A 1985 batch Indian Administrative Officer hailing from Andhra Pradesh, Rao has handled almost every major department in the Tamil Nadu government, including health and social welfare.

In 2016, when she won the second consecutive Assembly election, Jayalalithaa appointed Rao as chief secretary. He replaced Gnanadesikan in June. Rao has just seven months to go for his retirement in July next year.

A senior IAS officer, on condition of anonymity, said Rao was an efficient trouble shooter with in-depth knowledge of rules and regulations.

However, Jayalalithaa also appointed former top bureaucrats, like Sheela Balakrishnan, as advisers to the government, which somewhat undermined the chief secretary’s office. After her death on December 6, the secretariat was abuzz with stories about how Rao had become more assertive under the new dispensation. Chief Minister O Panneerselvam did not pick a new team and continued with the set of officers on whom Jayalalithaa depended.

This is why Wednesday’s raids have come as a shock to the bureaucracy in Tamil Nadu. Seen as an efficient unit that runs like a well-oiled machine even in the absence of the chief minister, like when Jayalalithaa was indisposed between September 22 and December 5, bureaucrats in Tamil Nadu hold immense power given the very nature of politics in the state.

This key feature is starkly visible whenever the AIADMK comes to power, as Jayalalithaa was known to bank more on her officers than her ministers. With Gnanadesikan suspended and Rao under IT department’s radar, questions are bound to be raised on unfettered powers in the hands of senior officers and its implications on transparent governance.

Mining link

When Reddy’s residence was raided last week, it was clear that the IT department had begun a larger operation that involved some of the most powerful people in the state.

Reddy’s rise has been swift. Since 2011, Reddy has been a major contractor in river sand mining. This automatically means that he must have been in close touch with the Public Works Department, a portfolio held by Panneerselvam between 2011 and 2016.

In 2015, just months after he was appointed as Tamil Nadu’s representative to Tirumala Tirupathi Devasthanam, Reddy put out a full-page advertisement in a newspaper claiming to be Jayalalithaa’s loyalist.

Reddy hails from a Telugu family in Vellore in north Tamil Nadu. Reddy started off as a small-time contractor laying roads and telephone cables, as per an article in Tamil magazine Vikatan. After allegedly coming into contact with an important AIADMK official, his fortunes shifted gears. He also joined the party formally in 1998.

An IT department official said Shekar Reddy’s name cropped up when a nation-wide scrutiny of bank deposits began, following the demonetisation of Rs 500 and Rs 1000 notes on November 9. What pointed to Reddy was large amounts of the old cash exchanged in certain branches of nationalised banks. Officials said despite not being a public servant, Reddy has been booked under the Prevention of Corruption Act as the CBI might drag bank officials in the case as well. The cases have been filed by the CBI since the IT department does not have the power to prosecute.

The official also said the department was on the lookout for three aides of Reddy, with the operation expected to move to Bengaluru and Mumbai in the coming days.

Opposition seeks removal

The raids and arrests evoked strong response from the Opposition in Tamil Nadu. Dravida Munnetra Kazhagam treasurer MK Stalin said the unprecedented nature of the raids have brought disgrace to Tamil Nadu. He urged the chief minister to appoint a new chief secretary. This demand was echoed by almost every political party, some of whom also sought the suspension of Rao.

But the Bharatiya Janata Party had the task of defending the Centre after Mamata Banerjee’s remarks that the raids were vindictive. The political context in Tamil Nadu has added to suspicion that the BJP might be using the raids to break the back of the AIADMK that was already facing a tough transition after Jayalalithaa’s death.

However, BJP officials were quick to point out that IT raids on AIADMK leaders did not start after Jayalalithaa’s death. In September, the residence of former electricity minister Natham R Viswanathan was searched. The sleuths also knocked on the doors of the former Chennai Mayor Saidai Duraisami’s son.

State BJP president Tamilisai Soundararajan said instead of trying to find a reason to blame the Centre, all parties should support the fight against corruption.

Political analyst Sampath Kumar said the raids should not be looked at as a short-term strategy to browbeat the AIADMK and influence its internal transition. Rather, it was very clear that the BJP has sensed an opportunity to expand its wings in Tamil Nadu after Jayalalithaa’s death.

He said the raids would further dent the image of the AIADMK leadership, which is set to move into the hands of Sasikala Natarajan, the close aide of Jayalalithaa who is already a co-accused in a disproportionate wealth case.

Additional Chief Secretary Girija Vaidyanathan has been appointed to replace Rao as the chief secretary. The state was waiting to see the nature of cases Rao would be booked under to decide the future course of action. If an IAS officer is arrested, suspension applies automatically.