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THE HIMALAYAN DISASTER: TRANSNATIONAL DISASTER MANAGEMENT MECHANISM A MUST

We talked with Palash Biswas, an editor for Indian Express in Kolkata today also. He urged that there must a transnational disaster management mechanism to avert such scale disaster in the Himalayas. http://youtu.be/7IzWUpRECJM

THE HIMALAYAN TALK: PALASH BISWAS TALKS AGAINST CASTEIST HEGEMONY IN SOUTH ASIA

THE HIMALAYAN TALK: PALASH BISWAS TALKS AGAINST CASTEIST HEGEMONY IN SOUTH ASIA

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Saturday, March 30, 2013

CBI showcases teeth at last as CBI tells Supreme Court: Manmohan Singh govt at fault over Coalgate scam!

CBI showcases teeth at last as CBI tells Supreme Court: Manmohan Singh govt at fault over Coalgate scam!


Palash Biswas


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What a development! Back to back, Mulayam`s explosive statement that the cntrer blackmails supporters to manipulate majority,CBI showcases teeth at last as CBI tells Supreme Court: Manmohan Singh govt at fault over Coalgate scam!CBI has lost its credit for its cover up role and suspended action. However,now it seems that the CBI and the Centre were at loggerheads on the coalgate scam in the Supreme Court today with the agency pointing out irregularities in the coal block allocation during UPA-I tenure under PM Manmohan Singh, while the government vehemently refuted all allegations.In a status report filed by CBI in the scam, the agency said the coal block allocation during 2006-09 was done without verifying the credentials of companies which allegedly misrepresented facts about themselves.


Mind you,the issue of land deals allegedly involving Congress President Sonia Gandhi's son-in-law Robert Vadra paralysed proceedings in Parliament. But nothing happened. Raja named the president and primeminister and claimed they knew everything about two G spectrum .Pranab as defence minister  finalised the VVIP Copter deal and he is named in  the government fact sheet. Black money game in the private banks was known to the finance ministry way back in 2011, but they sat on the report until cobra post blasted the phenomenon. Then, RBI covered it up.CBI investigation is  irrlevant just because of the presidential immunity in many of the scams.Corporate funded politics dare not consider impeachment. Hence, latest CBI stance seems rather funny!



A three-judge bench headed by Justice R M Lodha, which went through the report filed in a sealed cover, said the report prima facie alleges irregularities, but the Attorney General G E Vahanvati aggressively hit back on the finding saying, "CBI is not the final word on this."


Vahanvati, however, clarified that the government has no problem with CBI probe and pleaded the court to supply him with some part of the probe report on which he would respond.


"I am not trying to pre-empt the inquiry. I have no problem with it. Let CBI probe the allocation," the AG said.


The bench said the government should make a statement cautiously as it might affect the ongoing CBI probe in the case.


"Any of your comments must not prejudice CBI inquiry in the case. If you are challenging the very conspiracy angle of the controversy, then it would affect the probe," the bench, also comprising Justices J Chelameswar and Madan B Lokur, said.


The bench further directed the government to explain why a small group of companies have been "picked and chosen" for allocation of coal blocks out of the large number of companies that applied for it.


The court also asked the CBI director to file an affidavit that the status report submitted by the agency on March 8 was "vetted by him and not shared with political executives" and the same will be followed in future.


The court was hearing a PIL filed by various members of civil society including former CEC N Gopalaswami, ex-Navy chief L Ramdas and former Cabinet Secretary T S R Subramanian and advocate M L Sharma seeking a SIT probe into the coal block allocation scam.


During the hearing, when it was told that the apex court appointed central empowered committee can also be involved in the inquiry, the bench said it was not going into individual cases, as it was not required.


"We are not on individual case broadly. It has to be seen that whether guidelines were followed or not. The entire allocation goes if no procedure was followed," the bench observed.


The bench also observed that procedure followed prima facie does not seem to be proper legal procedure.


"Therefore, I just want to know whether the entire factual position has been stated (in government's affidavit) or something more is to be said," the court said.


On January 24, the apex court had questioned the Centre's power to allocate coal blocks to companies, saying it has a lot of "legal explanation" to do as the statutory Act empowers only the states to undertake this task.


The court had said the Centre cannot undermine the Mines and Minerals Act which has given no power to it to allocate coal block to companies.


The court's remarks came after the CBI had informed it that investigations into the coal block allocations have established irregularities by government authorities in allocation of the natural resources and around 300 companies are under its scanner.


In an affidavit filed before the apex court, the agency had said it is taking up the probe against each and every company which has been allocated coal block since 1993 and "in particular during the period 2006 to 2008".


The agency had also placed before the apex court a list of the companies and their directors against whom FIR has so far been lodged.


The agency had said it is not revealing all information of its probe in order to "preserve the confidentiality and integrity of the inquiry".


The affidavit was filed in response to the apex court order which had directed it to file comprehensive reply on the alleged irregularities in the coal blocks allocation.


Over Rs 4.18 lakh cr outstanding in income tax arrears till Dec: Chidambaram


Income Tax arrears outstanding at the end of December, 2012 totalled over Rs 4.18 lakh crore, Finance Minister P Chidambaram said today.

"The total income tax arrears outstanding as on December 31, 2012 are Rs 4,18,696 crore," Chidambaram said in a written reply in the Rajya Sabha.


This includes tax arrears of Rs 1,16,773.77 crore by major defaulter Hassan Ali Khan, Chandrika Tapuriah (Rs 47,040.99) crore and (Late) Harshad S Mehta (Rs 17,050.56 crore, he said.


The government has constituted a Special Cell to exclusively deal with recovery of arrears classified as "Assessee not traceable" and "Assessee with no assets/ inadequate assets for recovery".


"As a result of recovery measures undertaken by the Income Tax Department, total amount of Rs 16,686 crore has been collected during April 1, 2012 to December 31, 2012, which includes Rs 4.65 crores due to the efforts of the Special Cell," Chidambaram said.


The Finance Minister further said that the raising of demand and collection of outstanding taxes is a continuous process and all out efforts are made by the Income Tax Department to collect the outstanding taxes.


"As tax arrear is not a static concept, it is not possible to recover in full at any given point of time," he added.


Meanwhile, Minister of State for Finance S S Palanimanickam in reply to another question said arrears of indirect taxes was Rs 68,741.02 crore in 2011-12 and Rs 56,889.62 crore and Rs 44,212.23 crore, in the two previous fiscals, respectively.


Targets for recovery of arrears relating to indirect taxes for the fiscal 2013-14 has been fixed at Rs 4,000 crore.


Indian coal allocation scam

From Wikipedia, the free encyclopedia

*

This article needs attention from an expert in Indian politics. The specific problem is:Incomplete. WikiProject Indian politics may be able to help recruit an expert. (August 2012)

Coal allocation scam or Coalgate,[1] as referred by the media, is a political scandal concerning the Indian government's allocation of the nation's coal deposits to public sector entities (PSEs) and private companies. In a draft report issued in March 2012, theComptroller and Auditor General of India (CAG) office accused the Government of India of allocating coal blocks in an inefficient manner during the period 2004–2009. Over the Summer of 2012, the opposition BJP lodged a complaint resulting in a Central Bureau of Investigation probe into whether the allocation of the coal blocks was in fact influenced by corruption.[2]

The essence of the CAG's argument is that the Government had the authority to allocate coal blocks by a process of competitive bidding, but chose not to.[2] As a result both public sector enterprises (PSEs) and private firms paid less than they might have otherwise. In its draft report in March the CAG estimated that the "windfall gain" to the allocatees was 10673.03 billion (US$200 billion).[2] The CAG Final Report tabled in Parliament put the figure at 1855.91 billion (US$34 billion)[3] On 27 August 2012 Indian prime minister Manmohan Singh read a statement in Parliament rebutting the CAG's report both in its reading of the law and the alleged cost of the government's policies.[4][5][6]

While the initial CAG report suggested that coal blocks could have been allocated more efficiently, resulting in more revenue to the government, at no point did it suggest that corruption was involved in the allocation of coal. Over the course of 2012, however, the question of corruption has come to dominate the discussion. In response to a complaint by the BJP, the Central Vigilance Commission (CVC) directed the CBI to investigate the matter. The CBI has named a dozen Indian firms in a First Information Report (FIR), the first step in a criminal investigation. These FIRs accuse them of overstating their net worth, failing to disclose prior coal allocations, and hoarding rather than developing coal allocations.[7][8] The CBI officials investigating the case have speculated that bribery may be involved.[7]

The issue has received massive media reaction and public outrage. During the monsoon session of the Parliament, the BJP protested the Government's handling of the issue demanding the resignation of the prime minister and refused to have a debate in the Parliament. The deadlock resulted in Parliament functioning only seven of the twenty days of the session.[9][10]

Contents

 [hide]


[edit]1972–2010. Background to Coalgate: history of coal allocations In India

[edit]Firms eligible for a coal allocation

Historically, the economy of India could be characterized as broadly socialist, with the government directing large sectors of the economy through a series of five-year plans. In keeping with this centralised approach, between 1972 and 1976, India nationalised its coal mining industry, with the state-owned companies Coal India Limited (CIL) and Singareni Collieries Company (SCCL) being responsible for coal production.

This process culminated in the enactment of the Coal Mines (Nationalisation) Amendment Act, 1976, which terminated coal mining leases with private lease holders. Even as it did so, however, Parliament recognised that the nationalised coal companies were unable to fully meet demand, and provided for exceptions, allowing certain companies to hold coal leases:


  • 1976. Captive mines owned by iron and steel companies.

  • 1993. Captive mines owned by power generation companies.

  • 1996. Captive [11]

[edit]The coal allocation process

"In July 1992 Ministry of Coal, issued the instructions for constitution of a Screening Committee for screening proposals received for captive mining by private power generation companies." The Committee was composed of government officials from the Ministry of Coal, the Ministry of Railways, and the relevant state government.[11] "A number of coal blocks, which were not in the production plan of CIL and … SSCL, were identified in consultation with CIL/SSCL and a list of 143 coal blocks were prepared and placed on the website of the MoC for information of public at large."[12] Companies could apply for an allocation from among these blocks. If they were successful, they would receive the geological report that had been prepared by the government, and the only payment required from the allocatee was to reimburse the government for their expenses in preparing the geological report.[13]

[edit]Coal allocation guidelines

The guidelines for the Screening Committee suggest that preference be given to the power and steel sectors (and to large projects within those sectors). They further suggest that in the case of competing applicants for a captive block, a further 10 guidelines may be taken into consideration:


  • status (stage) level of progress and state of preparedness of the projects;

  • net worth of the applicant company (or in the case of a new SP/JV, the net worth of their principals);

  • production capacity as proposed in the application;

  • maximum recoverable reserve as proposed in the application;

  • date of commissioning of captive mine as proposed in the application;

  • date of completion of detailed exploration (in respect of unexplored blocks only) as proposed in the application;

  • technical experience (in terms of existing capacities in coal/lignite mining and specified end-use);

  • recommendation of the administrative ministry concerned;

  • recommendation of the state government concerned (i.e., where the captive block is located);

  • track record and financial strength of the company.[14]

[edit]Results of the coal allocation program

The response to the allocation process between 2004 and 2009 was spectacular, with some 44 billion metric tons of coal being allocated to public and private firms.[15] By way of comparison, the entire world only produces 7.8 billion tons annually, with India being responsible for 585 million tons of this amount.[16] Under the program, then, captive firms were allocated vast amounts of coal, equating to hundreds of years of supply, for a nominal fee.

Year of allocation

Government Companies


Private Companies


Power Projects


Total



No. of blocks

GR (in MT)

No. of blocks

GR (in MT)

No. of blocks

GR (in MT)

No. of blocks

GR (in MT)

Up to 2005

29

6,294.72

41

3,336.88

0

0

70

9,631.6

2006

32

12,363.15

15

3,793.14

6

1,635.24

53

17,791.53

2007

34

8,779.08

17

2,111.14

1

972

52

11,862.22

2008

3

509.99

20

2,939.53

1

100

24

3,549.52

2009

1

337

12

5,216.53

3

1,339.02

16

6,892.55

2010

0

0

0

0

1

800

1

800

Total

99

28,283.94

105

17,397.22

12

4,846.26

216

50,527.42

Out of the above 216 blocks, 24 blocks were de-allocated (three blocks in 2003, two blocks in 2006, one block in 2008, one block in 2009, three blocks in 2010, and 14 blocks in 2011) for non-performance of production by the allocatees, and two de-allocated blocks were subsequently reallocated (2003 and 2005) to others. Hence, 194 coal blocks, with aggregates geological reserves of 44.44 billion metric tons, stood allocated as at 31 March 2011.

Source: Draft CAG Report, Table 5.1.[17]

Given the inherent subjectivity in some of the allocation guidelines, as well as the potential conflicts between guidelines (how does one choose between a small capacity/late stage project and a large capacity/early stage project?) it is unsurprising that in reviewing the allocation process from 1993 to 2005 the CAG says that "there was no clearly spelt out criteria for the allocation of coal mines."[11] In 2005 the Expert Committee on Coal Sector Reforms provided recommendations on improving the allocation process, and in 2010 the Mines and Minerals (Development and Regulation) Act (MMDR Act), 1957 Amendment Bill was enacted, providing for coal blocks to be sold through a system of competitive bidding.[18][19]

The foregoing supports the following conclusions:


  • The allocation process prior to 2010 allowed some firms to obtain valuable coal blocks at a nominal expense

  • The eligible firms took up this option and obtained control of vast amounts of coal in the period 2005–09

  • The criteria employed for awarding coal allocations were opaque and in some respects subjective.

[edit]March 2012. Coalgate explodes: the Draft CAG Report

Overview

The CAG report, leaked to the press in March as a draft and tabled in Parliament in August, is a performance audit focusing on the allocation of coal blocks and the performance of Coal India in the 2005–09 period. The Draft Report, stretching to over 100 pages—far more detailed and containing more explosive allegations than the toned-down Final Report of some 50 pages—was the document that sparked the Coalgate furor. The Draft Report covers the following topics:


  1. Overview (pp. 1–2)

  2. Audit Framework (pp. 3–4)

  3. Institutional Framework (p. 5–10)

  4. Gaps in Supply and Demand (p. 11–17)

  5. Coal Blocks-Allocation and Production Performance (p. 18–55)

  6. Production Performance of CIL (p. 56–83)

  7. Conclusion and Recommendations (pp. 84–88)

  8. Annexures (pp. 89–110)

As far as Coalgate is concerned, the key passages of the Draft Report are in Chapter 5, where the CAG charges that:


  • In 2005 the Government had the legal authority to allocate coal blocks by auction rather than the Screening Committee, but chose not to do so.[20]

  • As a result of its failure to auction the coal blocks, public and private companies obtained "windfall gains" of 1067303 crore(US$200 billion), with private companies obtaining 4795 billion (US$88 billion) (45%) and government companies obtaining 5078.03 billion (US$93 billion) (55%).[21]

[edit]First CAG charge: the Government had the legal authority to auction coal blocks

The most important assertion of the CAG Draft Report is that the Government had the legal authority to auction the coal, but chose not to do so. Any losses as a result of coal allocations, then, between 2005 and 2009 are seen by the CAG as being the responsibility of the Government. The answer to this question turns on whether the Government could institute competitive bidding by an administrative decision under the current statute or whether it needed to amend the statute to do so.

The CAG devotes ten pages of its report to reviewing the legal basis for an auction, and comes to the following conclusion:

"In sum there were a series of correspondences with the Ministry for Law and Justice for drawing conclusion on the legal feasibility of the proposed amendments to the CMN Act/MMDR Act or through Administrative order to introduce auctioning/competitive bidding process for allocation of coal blocks for captive mining. In fact, there was no legal impediment to introduction of transparent and objective process of competitive bidding for allocation of coal blocks for captive mining as per the legal opinion of July 2006 of the Ministry of Law and Justices and this could have been done through an Administrative decision. However, the Ministry of Coal went ahead for allocation of coal blocks through Screening Committee and advertised in September 2006 for allocation of 38 coal blocks and continued with this process until 2009."[20]

Other parts of the report, however, suggest that while an administrative decision might be sufficient legal basis for instituting competitive bidding, the "legal footing" of competitive bidding would be improved if the statute were amended to specifically provide for it. i.e. there were some questions around the legality of using an administrative decision as the ground for an auction process under the current statute. Quoting the Law Secretary in August 2006:

"there is no express statutory provision providing for the manner of allocating coal blocks, it is done through a mechanism of Inter-Ministerial Group called the Screening Committee ... The Screening Committee had been constituted by means of administrative guidelines. Since, under the current dispensation, the allocation of coal blocks is purely administrative in nature, it was felt that the process of auction through competitive bidding can also be done through such administrative arrangements. In fact, this is the basis of our earlier legal advice. This according to the administrative Ministry has been questioned from time to time for legal sanction. If provision is made for competitive bidding in the Act itself or by virtue of rules framed under the Act the bidding process would definitely placed on a higher level of legal footing."[22]

So while the CAG certainly makes the case that the Government had legal grounds on which to introduce competitive bidding into the coal allocation process, saying that there was "no legal impediment" to doing so perhaps overstates their case.

[edit]Second CAG charge: "windfall gains" to the allocatees were 1067303 crore (US$200 billion)

If the most important charge made by the CAG was that of the Government's legal authority to auction the coal blocks, the one that drew the most attention was certainly the size of the "windfall gain" accruing to the allocatees. On pp. 32–34 of the Draft Report, the CAG estimates these to be 10673.03 billion (US$200 billion) with details in the following table:

Calendar Year

Government Companies



Private Companies



Government + Private Companies




90% of GR in MT

Windfall gain historic rates

Windfall gain Mar 2011 rates

90% of GR in MT

Windfall gain historic rates

Windfall gain Mar 2011 rates

90% of GR in MT

Windfall gain historic rates

Windfall gain Mar 2011 rates

2004

1,709

45,807

56,949

0

0

0

1,709

45,807

56,949

2005

1,388

34,056

45,561

1,776

39,146

85,523

3,163

73,203

131,084

2006

8,660

185,119

259,547

3,011

62,085

111,764

11,671

247,204

371,311

2007

7,000

64,066

207,098

1,747

38,284

51,502

8,746

102,350

258,599

2008

288

6,704

7,364

2,682

54,445

80,137

2,970

61,149

87,501

2009

303

2,438

11,285

4,605

99,735

150,574

4,908

102,174

161,859

Total

19,349

337,471

587,803

13,820

293,695

479,500

33,169

631,166

1,067,303

The table employs the following calculations for windfall gain:


  • windfall gain/ton = market price/ton – production cost/ton


  • windfall gain = windfall gain/ton x number of tons allocated x 90% (to reflect 90% confidence in the geology of the reserve)

Note that while the windfall gain/ton is fairly modest 322 (US$5.90), because of the vast size of the coal allocations, the total figure for the windfall gain is very large. Note also that the figure stated as a windfall gain would in fact accrue to the allocatee over the life of the reserve, which would likely exceed 100 years. Thus, using any reasonable discount rate, the Present value of the windfall gain will be dramatically smaller (perhaps one tenth) of the windfall gain stated in the CAG Report.[23]

While the headline number of 10673.03 billion (US$200 billion) was sure to attract the attention of the public, in the Annexures to the report the CAG listed the windfall gains by company, allowing readers to see who exactly benefited from the allocation program, and by how much. The resulting list, a veritable Who's Who of Indian commerce, ensured that the topic of coal allocations would be one of the most written about stories of 2012.

[edit]March–August 2012. Coalgate grows: the media, the BJP, and the CBI investigation

On 22 March, the Times Of India, broke the story on the contents of the Draft CAG Report:

NEW DELHI: The CAG is at it again. About 16 months after it rocked the UPA government with its explosive report on allocation of 2G spectrum and licences, the Comptroller & Auditor General's draft report titled 'Performance Audit Of Coal Block Allocations' says the government has extended "undue benefits", totalling a mind-boggling Rs 10.67 trillion (short scale), to commercial entities by giving them 155 coal acreages without auction between 2004 and 2009. The beneficiaries include some 100 private companies, as well as some public sector units, in industries such as power, steel and cement.[24][25]

The story listed the following companies as the leading beneficiaries of the coal allocations:

Private Sector


Public Sector



Company

Gains

Company

Gains


Strategic Energy Tech System (Tata-Sasol)

33,060

NTPC Limited

35,024


Electro Steel Casting

26,320

TNEB & MSMCL

26,584


Jindal Steel and Power

21,226

NTPC

22,301


Bhushan Power & Steel Ltd & others

15,967

JSEB & BSMDC

18,648


Ram Swarup & others

15,633

MMTC

18,628


JSPL & Gagan Sponge Iron Ltd

12,767

WBPDCL

17,358


MCL/JSW/JPL & others

10,419

CMDC

16,498


Tata Steel Ltd

7,161

MSEB & GSECL

15,335


Chhattisgarh Captive Coal Co Ltd

7,023

JSMDCL

11,988


CESC Ltd & J&S Infrastructure

6,851

MPSMCL

9,947


[edit]Allegations against S Jagathrakshakan

See also: S. Jagathrakshakan

In September 2012, several news reports alleged that family of S Jagathrakshakan, Minister of State for Information and Broadcasting in the UPA government is a part of a company named JR Power Gen Pvt Ltd which was awarded a coal block in Orissa in 2007. It was the same company which formed a joint venture with a public sector company, Puducherry Industrial Promotion Development and Investment (PIPDIC), on 17 January 2007. Barely five days after, PIPDIC was allotted a coal block. According to the MoU, JR Power enjoyed a stake in this allotment. However, JR Power had no expertise in thermal power, iron and steel, or cement, the key sectors for consumption of coal. Later, in 2010, JR Power sold 51% stake to KSK Energy Ventures, an established player with interests in the energy sector. In this way, the rights for the use of the coal block ultimately passed on to KSK.[26][27]

Reacting to this, Jagathrakshakan admitted to getting a coal block, and said that, "It is true that we got a coal allocation but it was a sub-contract with Puducherry government and then we gave it away to KSK company. Now, we have got nothing to do with the allocation but if the government wants to take back the allocation it can do so."[28]

[edit]Allegations against Subodh Kant Sahai

See also: Subodh Kant Sahay

In September 2012, it was revealed that Subodh Kant Sahay, Tourism Minister in the UPA government sent a letter to prime minister Manmohan Singh trying to persuade him for allocation of a coal block to a company, SKS Ispat and Power which has Sudhir Sahay, his younger brother, as honorary Executive Director. The letter was written on 5 February 2008. On the very next day, Prime Minister's Office (PMO) sent a letter to the coal secretary on 6 February 2008, recommending allotment of coal blocks to the company.[29][30]However, Sahay denied these allegations, citing that the coal block was allocated to SKS Ispat, where his brother was only an"honorary director".[31]

On 15 September 2012, an Inter Ministerial Group (IMG) headed by Zohra Chatterji (Additional Secretary in Coal Ministry) recommended cancellation of a block allotted to SKS Ispat and Power.[32]

[edit]Allegations against Ajay Sancheti and his link with Nitin Gadkari

Ajay Sancheti's SMS Infrastructure Ltd. was allegedly allocated coal blocks in Chhattisgarh at low rates.[33] He is a BJP Rajya SabhaMP and is believed to be in close relation with Nitin Gadkari. According to the CAG, the allocation of the coal block to SMS Infrastructure Ltd. has caused a loss of Rs.10 billion.[34]

[edit]Allegations against Vijay Darda and Rajendra Darda

Vijay Darda, a Congress MP and his brother Rajendra Darda, the education minister of Maharashtra, have been accused of direct and active involvement in the affairs of three companies JLD Yavatmal Energy, JAS Infrastructure & Power Ltd., AMR Iron & Steel Pvt. Ltd, which received coal blocks illegally by means of inflating their financial statements and overriding the legal tender process.[35][36]

[edit]Allegations against Premchand Gupta

UPA partner Rashtriya Janata Dal's leader Premchand Gupta's sons' company, new in the steel business applied for a coal block when Premchand Gupta was the Union minister for corporate affairs and bagged it about a month after his tenure ended along with that of his government. The company in question is IST Steel & Power – an associate company of the IST Group, which is owned and run by Premchand Guptas two sons Mayur and Gaurav. IST Steel, along with cement majors Gujarat Ambuja and Lafarge, was allocated the Dahegaon/Makardhokra IV block in Maharashtra. The company, which applied for a block on 12 January 2007, and was awarded it on 17 June 2009, is sitting on reserves of 70.74 million tonnes. The reserves it controls are more than the combined reserves held by much larger companies – Gujarat Ambuja and Lafarge. Gupta, who belongs to the Rashtriya Janata Dal headed by Bihar leader Lalu Prasad Yadav, was the minister of state for corporate affairs in UPA-I when his party was a constituent of the Congress-led coalition with 21 seats in Lok Sabha. However Mr Gupta maintains he had no involvement in IST Steel and denies influencing the coal-block allocation process.[37]

[edit]Allegations against Naveen Jindal

Congress MP, Naveen Jindal's Jindal Steel and Power got a coal field in February 2009 with reserves of 1500 million metric tones while the government-run Navratna Coal India Ltd was refused.

On 27 February 2009, two private companies got huge coal blocks. Both the blocks were in Orissa and while one was over 300 mega metric tones, the other was over 1500 mega metric tones. Combined worth of these blocks was well over Rs2 trillion (short scale) and these blocks were meant for the liquification of coal. One of these blocks was awarded to Jindal. Naveen Jindal's Jindal Steel and Power was the company which was allotted the Talcher coal field in Angul in Orissa in 2009, well after the self-imposed cut off date by the Centre on allocation of coal blocks.

The Opposition alleged that the Government violated all norms to give him coal fields. Naveen Jindal, however, denied any wrongdoing.[38][39]

On 15 September 2012, an Inter Ministerial Group (IMG) headed by Zohra Chatterji (Additional Secretary in Coal Ministry) recommended cancellation of a block allotted to JSW (Jindal Steel Works), a Jindal Group company.[40][41]

[edit]BJP Response

In response to the Times of India story there was an uproar in Parliament, with the BJP charging the government with corruption and demanding a court-monitored probe into coal allocations:

"'The CWG scam is (to the tune) of Rs 700 billion, 2G scam is Rs 1.76 trillion (short scale). But, now the new coal scam is Rs 10.67 trillion (short scale). It is a government of scams... from airwaves to mining, everywhere the government is involved in scams,' party spokesperson Prakash Javadekar told reporters."[42]

The BJP governments themselves were embroiled in this, since the states ruled by BJP had also opposed public auctions of the mines.[citation needed]

[edit]CBI Investigation

On 31 May 2012, Central Vigilance Commission (CVC) based on a complaint of two Bharatiya Janata Party Member of ParliamentPrakash Javadekar and Hansraj Ahir directed a CBI enquiry.[43][44]

There were leaks of the report in media in March 2012 which claimed the figure to be around 10600 billion (US$200 billion).[45] It is called by the media as the Mother of all Scams.[46][47] Discussion about the issue was placed in the Parliament on 26 Aug 2012 by the prime minister Manmohan Singh with wide protests from the opposition.[48]

According to the Comptroller and Auditor General of India, this is a leak of the initial draft and the details being brought out were observations which are under discussion at a very preliminary stage.[49] On 29 May 2012, Prime Minister Manmohan Singh offered to give up his public life if found guilty in this scam.[50]

[edit]Formation of Inter-Ministerial Group (IMG)

At the end of June 2012, coal ministry decided to form an Inter-Ministerial Group (IMG), to decide on either de-allocation or forfeiting the Bank Guarantees (BG) of the companies that did not develop allotted coal blocks. Zohra Chatterji, additional secretary, coal ministry was named as Chairman of the IMG. Other IMG members include representatives from power, steel, departments of economic affairs, industrial policy and promotion, and law and justice.[51]

Significantly, the decision was taken after the CVC had already ordered a CBI enquiry into alleged irregularities.[51]

As of 26 September 2012, the IMG has reviewed 31 coal blocks. Out of these, it has recommended de-allocation of 13 coal blocks and encashment of bank guarantees of 14 allottees.[52]

Sr

No

Name of Company

Location

Recommendation

(Cancellation or deduction of BG)

Remarks

Source

1

Castron Mining Ltd

Bramhadih, Jharkhand

Deallocate

Was allocated in 1996

[53]

2

Field Mining and Ispat Ltd

Chinora and Warora (Southern part), Maharashtra

Deallocate

Was allocated in 2003

[53]

3

Domco Smokeless Fuels Pvt. Ltd

the Lalgarh (North) West Bokaro, Jharkhand

Deallocate

Was allocated in 2005

[53]

4

Monnet Ispat & Energy Ltd.

Utkal B2, Orissa

Asked to submit BG of 3 years' royalty,

failing which the block may be de-allocated

Was allocated in 1999

[53]

5

Shri Virangana Steels Ltd

Marki Mangli-II, III and IV blocks in Maharashtra

Deduction of BG


[53]

6

Adhunik Metaliks,

Adhunik Corporation,

Orissa Sponge Iron,

Deepak Steel & Power,

SMC Power Generation Ltd,

Metaliks Ltd,

Visa Steel Ltd.

New Patrapara, Orissa

Deallocate


[54]

7

SKS Ispat

Rawanwara North, Madhya Pradesh

Deallocate


[54]

8

Tata Sponge

Radhikapur East, Orissa

Deduction of BG


[54]

9

Bhushan Steel

Bijahan, Orissa

Deduction of BG


[54]

10

Himachal EMTA Power Ltd &

JSW Steel Ltd

Gourangdih ABC

Deallocate

Was allocated in 2009

[40]

11

Gupta Metaliks & Power Ltd &

Gupta Coalfields Ltd

Nerad Malegaon

Deduction of BG


[40]

12

Usha martin Ltd

Lohari

Deduction of BG


[40]

13

Electrosteel Castings

North Dhadu

Deallocate


[55]

14


Choritand Telaiya

Deallocate


[55]

15

Maharashtra Seamless

Gondkhari

Deallocate


[55]

16

ArcelorMittal and GVK Power

Seregarha

Deduction of BG


[55]

17

Jayaswal Neco

Moitra

Deduction of BG


[55]

18

Neelachal Iron & Steel

Dumri

Deduction of BG


[55]

19

DB Power

Durgapur II/ Sariya

Deduction of BG


[55]

20

IST Steel and Power Ltd, Gujarat Ambuja Cement and Lafarge India

Dahegaon-Makardhokra IV, Maharashtra

Deallocate

The block was allocated on 17 June 2009. IST Steel and Power is owned by Mayur and Gaurav Gupta, sons of former Union corporate affairs minister Prem Chand Gupta.

[56]

21

Electrotherm (India) Ltd and Grasim Industries

Bhaskarpara, Chhattisgarh

Deallocate

The block was allocated on 21 November 2008

[56]

[edit]August 2012. Coalgate reaches Parliament: the Final Report and Manmohan Singh's rebuttal in Parliament

[edit]The CAG Final Report

[edit]Overview

On 17 August the CAG submitted its Final Report to Parliament.[57][58] Much less detailed than the Draft Report, the Final Report still made the same charges against the government:


  • The Government had the authority to auction the coal blocks but chose not to.[59]

  • As a result allocatees received a "windfall gain" from the program.[60]

The Final Report had the following outline:


  • Preface (pp. i–ii).

  • Executive Summary (pp. iii–viii)

  • Chapter 1. Coal—An Overview (pp. 1–6)

  • Chapter 2. Audit Framework (pp. 7–8)

  • Chapter 3. Augmentation of Coal Production (pp. 9–20)

  • Chapter 4. Allocation of Captive Coal Blocks (pp. 21–32)

  • Chapter 5. Productive Performance of Captive Coal Blocks (pp. 33–42)

  • Chapter 6. Conclusion and Recommendation (pp. 43–45)[61]

[edit]First CAG charge: the Government had the legal authority to auction coal blocks

In Chapter 4 of the Final Report, the CAG continued its contention that the Government had the legal authority under the existing statute to auction coal by making an administrative decision, rather than needing to amend the statute itself. Pages 22–27 chronicle key correspondence between the Secretary (Coal), the Minister of State (Coal), the prime minister's Office, and the Department of Legal Affairs from 2004 to 2012. From this record, the CAG draws the following conclusions:


  • The Government decided to bring transparency and objectivity in the allocation process of coal blocks, with 28 June 2004 taken as the cutoff date.

  • The DLA advice of July 2006 was sufficient grounds upon which to introduce competitive bidding, by means of an administrative decision.

  • Despite this DLA advice, there was prolonged legal examination as to whether an administrative decision or amendment of the statute was necessary for competitive bidding to be introduced. This stalled the decisionmaking process through 2009.

  • In the period between July 2006 and the end of 2009, 38 coal blocks were allocated under the existing process of allocation, "which lacked transparency, objectivity, and competition."[59]

[edit]Second CAG charge: "windfall gains" to the allocatees were 185591 crore (US$34 billion)

The biggest change from the Draft Report was the dramatic reduction in the windfall gains from 10673.03 billion (US$200 billion) to 1855.91 billion (US$34 billion)[62] This change is due to:


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