HZL disinvestment: CBI files PE against Vedanta chief Anil Agarwal, officials

Written by ENS Economic Bureau | New Delhi | Updated: Jan 11 2014, 23:55pm hrs
VedantaVedanta had bought 26% in HZL in 2002 for Rs 440 crore during the NDA regime.
The Central Bureau of Investigation has begun a probe into the allegations of irregularities in selling of government stake in Hindustan Zinc Limited (HZL) by registering a preliminary enquiry against Vedanta Group chairman Anil Agarwal and unknown officials of the disinvestment department and the mines ministry.

The CBIs move comes amid the government considering to offload its remaining 29.5 per cent stake in the company. Sterlite Opportunities, a Vedanta Group company, had acquired 26 per cent stake in HZL for a consideration of over Rs 440 crore during the National Democratic Alliance governments tenure in 2002.

The disinvestment triggered controversy as there were allegations that the official valuer had ignored valuation of some assets of the firm besides serious flaws in the stake sale process. Following the 2002 stake sale, in 2003 the government sold an additional 18.92 per cent of HZL to Sterlite for Rs 323.88 crore. The company acquired another 20 per cent through an open offer to the shareholders.

The CBI has registered a PE about one and half month ago into the alleged irregularities in HZL disinvestment, a CBI spokesman said.

According to a senior mines ministry official, the agency had in August asked for specific information from the ministry on how the company was privatised understandably without the approval of Parliament. While asking for entire records pertaining to the disinvestment of HZL in favour of Sterlite Opportunities, the investigating agency had also sought the names of the officials associated with the stake sale process. The CBI had also sought the opinion of the then Attorney General on Sterlites call option, the official said.

`We will not like to speak on the CBI inquiry. However, we would like to say that today HZL is worlds largest integrated zinc producer. Since disinvestment it has grown more than five fold, A Vedanta spokesman said in a statement. At the time of disinvestment, the companys reserves were 143.7 million tonnes (MT) which have increased ... to 348 MT. Since disinvestment the firm has executed 4 phases of expansion plans with an investment of Rs 12,000 crore, he said.