Investigations carried out by the Central Bureau of Investigation (CBI) into Coalgate look like turning the heat on the chief ministers of three states which had recommended the allocation of coal blocks to private companies. Central and state government officials who let the allottees sublet the captive coal blocks have also come under scrutiny.
Three NDA chief ministers, including two from the BJP, are likely to be mentioned by the CBI for recommending the names of three private parties for the allocation of coal blocks.
On the other hand, the CBI has apparently not found any criminal intent in the delay in introducing competitive bidding for coal blocks, and is thus not examining Prime Minister Manmohan Singh’s role as Coal Minister from 2006 to 2009. The CBI comes directly under the PMO.
The CBI has initially taken up cases regarding the allocation of captive coal blocks to private companies. Given the din in parliament over the Coalgate controversy, CBI teams are working round-the-clock and are likely to complete preliminary enquiries by the first week of September. After that, reports will be sent to the Central Vigilance Commission (CVC), seeking to register first information reports (FIRs) in at least 14 cases of allocation of coal blocks to private companies.
The numbers of FIRs may go up later, top sources in the CBI said.
The Comptroller and Auditor General CAG), in its performance audit report of the coal ministry, had squarely focused on the prime minister’s office (PMO) and Prime Minister Manmohan Singh as the Minister of Coal for delaying the process. But the CBI believes there was no criminal intent in this.
The CAG report said that the PMO had, in principle, agreed to set 28 June 2004 as the ‘cutoff’ date for considering applications as per the existing policy and introducing the policy of allotment through competitive bidding for applications filed after 28 June 2004. But the policy of competitive bidding is still not in place. It was delayed for some or the other, and the ministry ended up allocating 146 blocks through a Screening Committee, which CAG said was not transparent in its norms. The blocks allocated included 57 captive ones allotted to private companies. This resulted in a loss of Rs 1.86 lakh crore, the CAG report claimed.
Interestingly, Coal Minister Sriprakash Jaiswal has repeatedly pointed out that three state governments - of Chhattisgarh, Rajasthan and West Bengal - had opposed the ‘competitive bid’ policy.
But what Sriprakash Jaiswal chose not to dwell on was that the Planning Commission, the Ministry of Mines, the Department of Expenditure and the Steel Ministry had supported the proposal of ‘competitive bidding’ and had also recommended penalties for non-performance. Fifteen of the 57 captive blocks allocated to private companies did not perform.
Even in cases of the opposition chief ministers, the criminal intent is not yet established. But the CBI is likely to mention the names of the chief ministers on whose recommendations coal blocks were allocated to private companies. All these chief ministers are from the Bharatiya Janata Party (BJP) and its partners in the National Democratic Alliance (NDA). A mere mention of the chief ministers’ names in CBI reports will be sufficient to turn the political heat on the Opposition.
Interestingly, a majority of the captive coal blocks were allocated to private companies in Jharkhand, Chhattisgarh and Orissa. Between 2006 and 2009, 17 coal blocks were allocated in Jharkhand, 13 in Chhattisgarh, and nine in Orissa. In 2005, only 10 mines were allotted and all of them are in Jharkhand. The CBI may examine the allocation of these 10 mines as well, as the process of allocation had spilled over to next year (2006).
Only two mines each were allocated to private companies in West Bengal and Madhya Pradesh, where CPM’s Budhadeb Bhattacharya and BJP’s Shivraj Chauhan respectively were the chief ministers between 2006 and 2009. Four mines were allocated in Maharashtra during 2006 and 2007, when Vilasrao Deshmukh of the Congress was the chief minister.
In Jharkhand, BJP’s Arjun Munda was the chief minister between 2005 and 2006 and his Minister of Mines was Madhu Koda, who is in jail in a disproportionate assets case. In all, 14 mines were allocated to private companies during Arjun Munda’s time. And 13 were allocated between 2007 and 2009. Madhu Koda, an independent MLA, served as the chief minister with the support of the Jharkhand Mukti Morcha (JMM), Congress and Laloo Prasad’s Rashtriya Janata Dal from September 2006 to August 2008. Shibhu Soren of JMM also served a short stint as chief minister from August 2008 to January 2009.
In Chhattisgarh, BJP’s Raman Singh was at the helm of affairs when 13 mines were allocated to private companies, while Naveen Patnaik of Biju Janata Dal is serving his third term as chief minister of Orissa. Nine mines were allocated between 2006 and 2009.
Madhu Koda will obviously be easy prey, as he is already in jail for amassing wealth disproportionate to his income. During investigations by the Enforcement Directorate and other investigating agencies, including the CBI, one Basant Kumar Bhattacharya, an assistant in the mines department of the Jharkhand government, had stated that Madhu Koda used to recommend cases for the allotment of mines and his fee used to be Rs 2 lakh per hectare.
A chartered accountant who used to file returns for Madhu Koda has apparently admitted that Binod Sinha, a close friend of Koda, had made huge investments (on behalf of Koda) in Lemos Cement Ltd, a company previously owned by SR Rungta. According to the CAG report, Rungta Mines Ltd is one of the 57 private companies allocated captive coal blocks and had thus caused losses to the government exchequer.
During Arjun Munda’s tenure, the Jharkhand government had signed 44 memoranda of understanding for setting up power, steel and other infrastructure projects. And in each MoU, the Jharkhand government had given a written declaration that his government would assist them in getting captive coal blocks.
The names of Naveen Patnaik and Raman Singh are also likely to figure in the CBI report for recommending the allocation of captive blocks in their respective states. The CBI is still examining if there was any ‘criminal intent’ in these recommendations.
In a majority of the cases, the opinion of the chief minister was not bypassed while allocating a coal mine to a private company. And most of these allocations had happened through recommendations, because the Screening Committee did not evaluate the stakes of companies that sought captive coal blocks. The responsibility of checking the veracity of the company was usually left to the person or the ministry.
This is evident when CAG pointed out in its report that 69 companies applied for the Fatehpur coal block located in Chhattisgarh, but only 36 applicants were called and two companies – SKS Ispat & Power Ltd and Prakash Industries Ltd – were shortlisted for it.
Similarly, in Orissa, 108 applications were received for coal blocks and only two applicants were shortlisted for making a presentation before the Screening Committee. In the end, the Screening Committee recommended six companies – Sterlite Energy Ltd, GMR Energy Ltd, Lanco Group Ltd, Navbharat Power Ltd, Mittal Steel India Ltd and Reliance Energy Ltd – for allocation of coal blocks in Orissa.
The CAG report observes: “Minutes of the Screening Committee did not indicate how each one of the applicants for a particular coal block was evaluated. Thus a transparent method for allocation of coal blocks was not followed by the Screening Committee.’’