Kumar Mangalam Birla embroiled in Coalgate case with CBI filing 14th FIR

Oct 16 2013, 10:45 IST
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Kumar Mangalam Birla has been booked as a representative of AV Birla Group and its group company Hindalco industries. Kumar Mangalam Birla has been booked as a representative of AV Birla Group and its group company Hindalco industries.
SummaryCBI has filed a fresh case in the coal block allocation scam against chairman of Aditya Birla Group.

The Central Bureau of Investigation (CBI) has filed a fresh case in the coal-block-allocation scam against the chairman of the Aditya Birla Group and Hindalco Industries, Kumar Mangalam Birla, and former coal secretary PC Parekh. The charges relate to criminal conspiracy and corruption in the allocation of a captive coal block in 2005 in Orissa, which was pri-marily meant for public sector firms.

Following the registration of the first information report (FIR), its 14th in the case, the CBI carried out searches at the offices of the group across Delhi, Kolkata, Bhubaneswar and Mumbai. Searches were also carried out at the former coal secretary's residence in Secuderabad. The accused have been booked for criminal conspiracy under section 120B of the Prevention of Corruption Act.

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,” a company statement said.

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

According to a CBI statement, the allegation against Birla and his company is that he influenced the then coal secretary in getting the block, Talabira II in Orissa, allocated to Hindalco, when its was meant only for allocation to public sector firms. The investigative agency said 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. This lead to notional loss to the exchequer. The agency has not been able to quantify the exact loss as the block is not operational as yet.

“The agency is probing why the earlier decision was overturned. We will see whether there's a case of quid-pro-quo or illegal gratification,” a CBI official said.

The CBI has also booked unknown public officials for abusing their position to favour private companies. “The agency is also probing whether the officials of these PSUs were also involved,” the official added.

Coal block allocations became controversial after the Comptroller and Auditor General in its 2012 report estimated that the exchequer suffered a notional loss of Rs 1.86 lakh crore on the basis of administrative allocations rather than auctions.

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.

This is the first FIR from the preliminary enquiry into allocation of coal blocks and awarding of contracts for formation of joint ventures by government companies under the Government Dispensation Category from 1993 onwards, CBI officials said. The previous 13 FIRs registered by the CBI were from the enquiry that looked into allocations made during 2006-09.

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