The Scam:
Coal allocation scam or as the media popularly calls it ‘Coalgate’ was a political scam wherein the CAG accused the Government of India of allocating coal blocks in an inefficient manner. The national coal deposit which was to be allocated through competitive bidding was unevenly distributed among public precincts establishments and also many private institutions during the period 2004 to 2009. The amount paid by them was less than what they might have to pay otherwise, thereby making an estimated ‘windfall gain’ of ?1,856 billion. The average allotment of coal was supposed to be only 3-4 blocks every year. There was an abnormal increase of allotment of as many as 22-24 blocks when Dr Manmohan Singh was in charge during 2006-09 while it was carried out without following any competitive process thereby being against the interest of the public exchequer. The CAG initially stated about the inefficient allocation of coal and the loss of revenue for the government but did not mention about the corruption involved. BJP later lodged complaints with the Central Vigilance Commission (CVC) which instructed CBI to investigate in this regard. CBI came up with a report stating names of a dozen Indian firms in FIR accusing them of overstating their profits, not disclosing prior coal allocations, and hoarding rather than developing coal allocations and even bribery.
Free Allocations :
195 coal blocks were allocated between 1993 and 2011 out of which 39 were allocated before 2004. There was a free allocation to the extent of 44,802.9 million tonnes between 1993 and 2011. Blocks were given for free during 1993-96 when Congress, led by PV Narasimha Rao, was in power. When UPA was in power, 41,235.9 million tonnes of coal blocks were allocated for free which is 92% of the total reserve during 2004-11. Blocks given for free between 1993 and 2009 amounted to 17,397.22 million tonnes, of which 14,060.34 million tonnes was allocated between 2006 and 2009 when such giveaway was at its peak. Manmohan Singh was coal minister for large part of this period.
China was gobbling up commodities from all over the world between 2004-05 and 2008-09 which led an increase in the price of coal from $20 per metric tonne in 2003 to $40 in mid-2005. It reached $190 in mid-2008. As the price of coal rose, the number of free give away of blocks increased. All the above facts point out that ‘Coalgate’ was a Congress Scam.
Political protests :
The CAG charged yesteryear prime minister of India Dr Manmohan Singh for being a part of the scandal and was asked to resign from his posting. The opposition Bharatiya Janata Party protested against the ruling Congress Party. Anti-corruption activists like Arvind Kejriwal and Anna Hazare headed a march towards the residence of the prime minister and other members. The Parliament held only 7 sittings in the month of August 2012 instead of 20 because the opposition was stern on the fact that Prime Minister must take the responsibility and resign. He also refused to have a debate in the Parliament.
People involved in the scam :
Coalgate was a huge political scam which pulled top leader and bureaucrats into the probe during UPA regime.
- CAG accused the then Prime Minister of India, Dr Manmohan Singh for the Coal Scam Probe: questioning his integrity and honesty, asking him to resign.
- A former secretary in coal ministry, H C Gupta, former joint secretary K S Kropha and former director of the coal ministry, K C Samaria were also found guilty under the Prevention of Corruption Act and IPC. One of the prime offences was the abuse of public office.
- India’s blue-chip companies like JSPL, Tata Power, Hindalco and Essar were also named in the scam.
- Industrialists like Kumar Mangalam Birla and Naveen Jindal had their names in the FIR lodged by CBI.
- Ajay Sancheti, BJP Rajya Sabha MP who has links with Nitin Gadkari was allegedly allocated coal blocks in Chhattisgarh, in the name of the company SMS Infrastructure Ltd. According to CAG, the allocation was made at low rates which caused a loss of ?10 billion.
- Premchand Gupta, Rashtriya Janata Dal’s leader who is a UPA partner. His son’s newly formed company IST Steel and Power had applied for a coal block when Premchand Gupta was Union minister and secured the contract within a month.
- Naveen Jindal, Congress MP, under the name of his company, Jindal Steel and Power was awarded Talcher coal block in Angul, Orissa in 2009. The opposition alleged that norms were violated by the government for allowing him coalfields. He was even accused of cheating and misconduct in the 12th FIR in the scam.
- Vijay Darda, MP Congress illegally received coal blocks by inflating financial statements and overriding the tender process and was accused of having active involvement in the affairs of three companies JAS Infrastructure and Power Ltd, AMR Iron and Steel Pvt Ltd, JLD Yavatmal Energy.
CBI – ‘Caged Parrot’
Supreme Court termed CBI as a ‘caged parrot’ as, in early 2013 the director of CBI, Ranjit Sinha admitted that the initial report of the scam was shared with the law minister and bureaucrats related to coal ministry and PM’s office and changes were made in same. Also, UPA government pressurised former CAG head, Vinod Rai, to leave out certain names from the CAG’s report.
Missing files:
Sriprakash Jaiswal, Coal minister, in August 2014 claimed that some crucial files of the period between 1993 and 2004 had gone missing. out of 13 companies against whom CBI filed FIRs, files related to 11 were missing. Among these companies was AMR Iron and Steel Pvt Ltd. whose directors were Arvind Jayaswal, Manoj Jayaswal, Ramesh Jayaswal and Devendra Darda who had close ties with Congress MP Vijay Darda. Another Darda company’s files went missing which was M\s JLD Yavatmal directors of which were Vijay Darda, Rajendra Darda, Devendra Darda, Manoj Jayaswal, Anand Jayaswal and Abhishek Jayaswal. Files of M\s Vini Iron and Steel Udyog Ltd, Kolkata which was given coal block in Jharkhand in 2008 also went missing. The company was later sold to Vijay Joshi, a close aide of former CM of Jharkhand Madhu Koda.
Convictions:
- H C Gupta is convicted for allocating coal block to KSSPL.
- K S Kropha, coal ministry’s former joint secretary and K C Samaria, the then director in the ministry’s section were also convicted along with former managing director, P K Ahluwalia under Prevention Of Corruption Act and for criminal conspiracy.
By Nidhi Rajgor
Image Source: in Coal Scam
This article is from India section of ‘The Economic Transcript’, August 2017. To subscribe click here.
Reference links:
https://en.m.wikipedia.org/wiki/Indian_coal_allocation_scam