Coal scam: Aditya Birla group's Hindalco Industries hit by corruption charge

Written by FE Online | New Delhi | Updated: Oct 16 2013, 00:35am hrs
Kumar Mangalam BirlaNone of the company?s coal blocks are stuck because of the 'coalgate' scam: Kumar Mangalam Birla Reuters photo
The coal block allocation scam has taken a sensational turn with CBI registering a corruption case against Aditya Birla Group chief Kumar Mangalam Birla and former Coal Secretary P C Parekh in connection with alleged irregularities in allocation of coal blocks in 2005.

More than that, reports indicate CBI is conducting raids on the premises of the company in various cities including Mumbai, Delhi, Hyderabad and Bhubaneshwar.

The 46-year-old head of the Aditya Birla group, Kumar Mangalam Birla, will be called in for questioning, CBI sources said.

The $40 billion (about Rs. 2.45 lakh crore) conglomerate has denied receiving any FIR and refuted allegations of any wrongdoing.

CBI registered the 14th FIR in the high profile coal block allocation scam and has named Kumar Mangalam Birla in the chargesheet that specifically mentions cheating and forgery.

On Tuesday, Hindalco Industries shares are among the top losers on the Indian stock markets.

CBI sources said the agency has booked Kumar Mangalam Birla as a representative of Aditya Birla Group and his group company Hindalco Industries for alleged corruption in the allocation of Talabira coal block in Odisha which was allotted to it on November 10, 2005.

The block was allocated for power production during 25th meeting of screening committee, they said.

"CBI registers a fresh case in alleged irregularities in coal scam against the then Coal Secretary, M/s Hindalco, representative of Adita Birla Group, unknown persons and officials," agency spokesperson Kanchan Prasad said.

Parekh, who was Coal Secretary at the time of this allocation, faces charges under the Prevention of Corruption Act as also criminal conspiracy and other offences.

CBI has been at the receiving end in the Supreme Court which has pased tough questions on why coal fields were allocated to private players without a transparent bidding process, the slow pace of probe as also on missing files.

The Centre had on August 29 faced the ire of the Supreme Court on missing files on Coalgate and for not sharing information with CBI and was directed to hand over relevant documents within two weeks to the agency which would also probe disappearance of certain vital papers.

Holding that the missing documents are vital for the probe in the scam, the apex court had directed the Coal Ministry to lodge complaint with the CBI if it fails to trace any documents, sought by the agency.

The apex court had observed that the agency was still in the "first gear" in its probe and needed to pick up speed.

It directed CBI to conclude the probe against all companies, which were allocated coal blocks, by December this year and ordered it to file the status report on this issue by October 22.

Congress MP Naveen Jindal and former Minister of State for Coal Dasari Narayan Rao have been accused of alleged cheating and graft by CBI in one of its FIRs in the coal scam.

Besides Jindal and Rao, CBI has also booked companies Jindal Steel and Power Limited and Gagan Sponge which were allotted Amarkonda Murgadangal coal block in Birbhum, Jharkhand in the year 2008.

CBI has also registered a case against Delhi-based steel company Rathi Steel and Power Limited, its Chief Executive Officer Udit Rathi and unknown others for allegedly giving false data about its land holdings and capacity while getting a coal block in Chhattisgarh.

In September last year, Aditya Birla Groups flagship company Hindalco Industries Ltd chairman Kumar Mangalam Birla had reassured shareholders that none of the companys projects and coal blocks are mired in the ongoing illegal coal block allocation scam that was brought to light by the Comptroller and Auditor General (CAG).

None of the companys coal blocks are stuck because of the 'coalgate' scam, Kumar Mangalam Birla told shareholders at the companys 53rd annual general meeting in Mumbai. None of our ongoing expansion projects and greenfield projects will get delayed because of this.

Last month, a CAG report questioned the basis of the governments method of coal block allocation and criticised the government for opting not to choose a competitive bidding method. CAG said 155 such coal block allocations had resulted in windfall gains of over Rs 10 lakh crore for those who were allocated the coal blocks.

Hindalco, currently, is in the final stages of setting up aluminium plants at Madhya Pradesh and Orissa. It recently got approval for mining coal at the Mahan coal block to fire its captive power plants for the 395,000 tonnes per annum aluminium plant at Mahan.

Kumar Mangalam Birla told shareholders that the company will be spending roughly Rs 10,000 crore on capital expenditure in India apart from a further $1.5 billion for Novelis expansion and Greenfield projects.

All of the companys major strategic expansions in Brazil, South Korea and the United States are on track, he had said. In Brazil we would be investing $380 million, in US it will be $200 million and in Korea we will put in $400 million.

Kumar Mangalam Birla added that Hindalco Industries' performance has been better than most global aluminum producers.

With inputs by PTI