Coalgate: Birla's Hindalco clueless about Rs 25 crore cash seized by CBI

Even as the Income Tax department began probing the Rs 25 crore in unaccounted cash recovered from Hindalco’s office in New Delhi, company officials failed to explain the source of the cash or why it was kept there.

The money was recovered during searches carried out Tuesday after the Central Bureau of Investigation (CBI) registered a case against industrialist Kumar Mangalam Birla and former coal secretary PC Parakh on charges of criminal conspiracy and misuse of official position over alleged irregularities in the allocation of coal blocks.

The CBI had booked Birla as a representative of Aditya Birla Group and his group company Hindalco, one of the biggest producers of primary aluminium in Asia, for alleged corruption in the allocation of the Talabira II coal blocks in Odisha which was allotted to it on November 10, 2005.

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[caption id=“attachment_1102055” align=“alignleft” width=“380”]  Kumar Mangalam Birla.[/caption]

The money was seized on Tuesday following the FIR and was handed over to the I-T department after company officials failed to account for the large sum. Hindalco, meanwhile, is merely ’taken aback ’ by the discovery of the cash and hasconstituted a team to get to the bottom of the matter.

“The company is taken aback by the discovery of cash at one of its offices by the investigating agency. It has taken a very serious view of the matter and has instituted an internal team of senior managers to make a thorough investigation and report its findings at the earliest. In the meantime, the company has reiterated to the government agencies of their continued cooperation”, Hindalco said in a statement.

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An Economic Times report quoted CBI source as saying that the searches had unearthed “invoices for gold coins worth Rs 19 lakh”.

However, Ashok Gupta, the Aditya Birla Group’s general counsel, told the paper that he will not be able to respond in a meaningful manner as he did not have copies of invoices and documents that the CBI seized.

The I-T department will now ask the company to produce documents and validate the source of the recovered cash of Rs 25 crore.

Meanwhile, CBI has claimed to have made a fresh recovery from the group which included retail invoice of gold coins totalling to Rs 94 lakh, investments in various schemes to the tune of Rs 17 lakh besides Rs 24 lakh ‘petty cash’.

The FIR against Hindalco alleges that the award of 15% mining rights for Talabira II forced Neyveli Lignite Corporation (NLC), the PSU which was allotted the coal block earmarked exclusively for government entities, to scrap its plan to set up a power plantand accused Parakh of misusing his own position and upturning his decision in giving Hindalco mining rights. According to the CBI, the block was first allocated only to a public sector unit in April 2005 but Hindalco received a 15 per cent share in the mine after Birla met the then coal secretary

Ironically, this very coal block cannot start production for another four to five years as it has not been able to get clearances from various authorities even though it was allotted in 2005. According to a report in the Business Standard, the Talabira mine is yet to receive Stage-II clearances from the Union environment ministry.

A senior official in Mahanadi Coalfields, which is carrying out project activities for mine development, told the Economic Times that all major milestones including obtaining the mining lease, land acquisition and forest clearances were pending even though Hindalco has invested Rs 17,000 crore in the attached 900-mw captive power plant.