Coalgate FIRs: Now, a bizarre twist - closure?

BS :Nikhil Inamdar  |  Mumbai  

October 21, 2013 Last Updated at 17:16 IST

Reports suggest CBI could close the case against Birla. 

That would leave more questions than answers..

It’s over quicker than it started. 

 

In a bizarre turn of events, the CBI seems all set to wind down the high profile case against Kumaramangalam Birla according to a Times of India report, after Prime Minister Manmohan Singh’s hard defence on the allocation of coal blocks to Hindalco put the investigative agency in a spot.

Conspiracy theorists point to the fact that the case has had exactly the effect that was desired of it – a closure for all parties concerned. Many had called the CBI’s FIR against Birla and former Coal Secretary P C Parakh, who was also the whistleblower in the coal allocation scam ‘flimsy’. And ironically the investigative agency seems keen on proving them right by shuttering the case in which it had not so long ago claimed to have found "incriminating evidence" against Birla in the searches it conducted at 5 locations. 

 

The CBI’s basic point of contention was that the screening committee’s recommendations were overturned by Parakh. This, it deduced as abuse of official position to favour a certain party. But at no point could the CBI establish any quid pro quo, even conceding that a "competent authority" had made the final call in Hindalco's favour. It never got around to naming who the “competent authority” was, but the inference that most drew was, that it was referring to the PMO.  And now, with the “competent authority” i.e. the Prime Minister vociferously defending the allocations made by him, claiming there was no wrongdoing, the high profile case seems to be fast unraveling.

There is no reason for this to be an open-and-shut case though, says Prashant Bhushan, an advocate and leader of the Aam Aadmi Party. According to Bhushan, under the PCA (Prevention of Corruption Act), an act of criminal misconduct is enough for the CBI to initiate an enquiry, and the allotment of the blocks to Birla was such an act. 

 

“The screening committee gave three valid reasons while rejecting Birla’s application initially, including the fact that the block was reserved for the public sector. So Hindalco wasn’t eligible to apply, despite which the blocks were awarded to the company. This is an act of criminal misconduct, which amounts to largesse to a private entity,” says Bhushan. 

 

But others disagree. To prove criminal liability, “there must be clear evidence of an individual's involvement in the illegality”, says Senior Counsel Arvind Datar. 

 

Agrees Senior Advocate Vikas Singh. “There has to be some kind of quid pro quo established to assert criminality. This was a matter of policy. A mere wrong decision or non adherence to policy cannot be reason enough to assume criminality Mens Rea.” 

 

Most experts agree that though the CBI was well within its rights to file an FIR to initiate an enquiry, in the absence of hardcore evidence or quid pro quo, it was simply an overreaction. “This was definitely an overreaction because of the pendency of the matter in the Supreme Court. Investigating agencies must have an independent mind of their own and not be bogged down by courts” adds Singh. 

 

As the investigating agency bids a hasty retreat, there are more questions than answers. 

 

Did, the CBI act under pressure from the courts? 

 

Did it suddenly realize that without establishing quid pro quo, it wouldn’t be able to proceed? 

 

More importantly, what happened to the ‘incriminating evidence’ it had found? 

 

Finally, why did it not name the “competent authority”, hauling up instead the former Coal Secretary in its FIR? 

 

The first 3 questions, CBI must answer. But the PMO’s rejoinder to this case could give a clue to the last question and also indications on how the case will proceed from here. In a press release the PMO stated that “The Prime Minister is satisfied that the final decision taken in this regard was entirely appropriate and is based on the merits of the case placed before him.” 

 

Note the latter half of the sentence – “based on the merits of the case placed before him.” 

 

Who put the “merits of the case” before him? Parakh presumably? 

 

Where then, does the buck stop?

CBI’s case against KM Birla in Coalgate: all you need to know

by FP Staff Oct 16, 2013

Shares of Aditya Birla Group companies fell to a three-month low on Tuesday after the Central Bureau of Investigation registered a case against Group Chairman Kumar Mangalam Birla for alleged irregularities in allocation of coal mining rights in 2005.

The charges relate to criminal conspiracy and corruption in the allocation of a captive coal block in 2005 in Orissa, which was primarily meant for public sector firms. The investigation agency has alleged that  the block was allocated to Neyveli Lignite and Mahanadi Coalfields (both PSUs) in 2005 but sometime in the middle of the year Birla met Parekh after which the earlier decision of the screening committee was overturned and Hindalco was also accommodated along with the two.

CBI has booked Birla as a representative of AV Birla Group and its group company, aluminium maker Hindalco.

The CBI claims Hindalco did not meet the criteria for being awarded a mining lease but the  AV Birla Group, on its part, has strongly denied the charges stating that every process stipulated under the coal allocation policy by the government were followed.

“This relates to media reports on an FIR naming Hindalco and our chairman on the coal issue. Apparently, this seems to be part of a larger case entailing coal allocation to companies, and being one of the companies, we are being investigated also. We wish to state unambiguously that we have followed every process required for allocation of coal completely, as stipulated by the government policy,”  group company Hindalco said in a  statement.

The denial comes after shares of Hindalco fell about 5 percent in morning trade on Tuesday, while stocks of other group companies likeIdea Cellular and AB Nuvo were also impacted.

Hindalco Industries’ scrip had tanked 4.97 percent to Rs 105.10, whileAditya Birla Nuvo had fallen by 4.16 percent to Rs 1,209.90 and Idea Cellular lost 1.35 per cent to Rs 182.45 on the BSE. Among others, shares of Grasim Industries Ltd fell by 1.18 per cent, while Aditya Birla Chemicals was down 1.42 per cent and Aditya Birla Money shed 3.71 percent.

According to reports, the CBI has discovered that Birla had met former coal secretary P C Parekh, to push for the allocation of the Talabira II coal block in Odisha’s Jharsuguda district in the second half of 2005.

The Talabira II coal block has reserves of about 153 million tonne. It was allotted to Hindalco, along with the other two PSU, for captive power production of 900 MW for its greenfield aluminium project in Orissa. Talabira II is crucial for Hindalco’s Aditya Aluminium, which has investments in a 4.2 million tonnes bauxite mine, 1.5 million tonnes alumina refinery and a 359,000 tonne smelter.

“CBI has alleged Birla’s company was accommodated in the said coal block, though the provisions allowed allocation only to public-sector companies. The screening committee’s recommendations were overturned, abusing the official position, to give favours to Hindalco,”the Business Standard reported, quoting a senior CBI official.

Hindalco managing director Debu Bhattacharya however clarified in a statement that the application for the Talabira II mine (for which CBI filed the FIR) was made in 1996 by Indal, the Indian subsidiary of Alcan, the Canadian aluminium major. Indal was acquired by Hindalco in 2000, which subsequently pursued the matter.

“The reality of the matter is very different from what has been projected… The actual allocation of the mine was done in November 2005, which is nine years after the first application was made,” said Bhattacharya, adding that Hindalco made several representations to the government but only through “formal channels”.

“To imply that our chairman, Kumar Mangalam Birla, managed to overturn the decision of the screening committee is preposterous. The truth of the matter is that the Talabira II and III mines together have been finally allotted jointly to Mahanadi Coal Fields and Neyveli Lignite, both public sector undertakings, with Hindalco having only a 15% stake in the joint venture,” said Bhattacharya.

The project for which this mine was allocated  is ready to be commissioned later this month,  while the clearances to permit mining have not been received so far, he added.

Apart from Hindalco, an FIR has been filed against government-ownedNational Aluminium Company Ltd (Nalco), too. But Nalco said, through a notification to BSE, that it had no information about any FIR filed against the company on allocation of the Utkal-E coal block in Odisha.

The CBI has so far lodged 14 cases against individuals and firms including other high profile industrialists like Naveen Jindal and his company JSPL, Kumaramangalam Birla, Congress MP Vijay Darda and his brother Rajendra Darda, JLD Yavatmal Energy Limited, AMR Iron & Steel Private Limited, Vini Iron & Steel Udyog among others.

A Standing Committee report has suggested that allocation of all coal blocks between 1993 and 2008 was unlawful, seeking licenses of those mines where production hadn’t started to be cancelled, in effect indicting both the NDA and UPA regimes.