FIR against Birla in coal scam: Is UPA govt hounding industrialists?

The FIR against industry doyen Kumar Mangalam Birla in the coal blocks allocation case being investigated by the Central Bureau of Investigation raises the question of whether India is returning to the 1980s, when industrialists were hounded, a period that Union Minister Manish Tewari called a time when profit was a dirty word.

In an interview with Karan Thapar, Chairman of Godrej group,Adi Godrej, said on Friday that the objection to a particular coal block being allotted to Hindalco instead of to a public sector enterprise is absurd. “Dragging a well-known industrialist into this will certainly be seen as a deterrent for investment,” he said.

Expressing a similar opinion, Chairman of Manipal Global Education Mohandas Pai said that the naming of Kumar Mangalam Birla was depressing. “I have never been so depressed about my country in the last 20 years as I am today, especially after what they did to Kumar Mangalam Birla, because if the investigative agency says there’s a conspiracy and then the minister in charge and later the government gives him licence for which he applied many years ago, without having hard evidence, this is a sad commentary on the state of regulations in this country,” he said.

India Inc and the IAS Officers’ Association has hit out at the government for naming the Aditya Birla group chairman and former coal secretary P C Parakh in the latest Coalgate FIR. The CBI registered a case against industrialist KM Birla in connection with alleged irregularities in allocation of coal blocks in 2005.

Captains of the industry on Thursday hit back at the government for dragging in Hindalco, the world’s largest aluminium rolling company, into the Coalgate scam, terming it as a “ridiculous” decision which would have a negative impact on the already floundering economy.

“Just because some coal block which was reserved for the public sector is partially allocated to the private sector, it cannot be termed wrong. So I think it’s (the FIR) a bit ridiculous; it’ll spoil sentiment, perception and several things…,” Godej said.

A number of internationally reputed companies such as Vodafone, Cadbury and Nokia are involved in controversial tax disputes with the Indian government. Given that these companies are the country’s biggest investors, these disputes sends out a negative signal to all other potential investors, he said. “This is creating a negative perception of the Indian economy,” Godrej told CNN-IBN.

HDFC Bank chairman Deepak Parekh and country head of HSBC India Naina Lal Kidwai also came out in support of Hindalco.

Significantly, Union corporate affairs minister Sachin Pilot too had expressed doubts over the FIR saying, “We must ensure that such actions are based on hard facts and do not create an atmosphere of fear and uncertainty.”

The 14th first information report (FIR) in the alleged coal block allocation scam has named industrialist Kumar Mangalam Birla as an accused, along with the government’s former coal secretaryP C Parekh, for alleged criminal conspiracy and abuse of official position. According to a seniorCBIofficial, the agency has found Birla had met Parekh to push for the allocation of the Talabira II coal block in Odisha’s Jharsuguda district in the second half of 2005.

CBI has alleged Birla’s company was accommodated in the said coal block, though the provisions allowed allocation only to public-sector companies. “The screening committee’s recommendations were overturned, abusing the official position, to give favours toHindalco,” the CBI official said.

The scam broke after the national auditor Comptroller and Auditor General (CAG) in a report last year suggested that the arbitrary allocation of coalfields may have robbed the exchequer of potential revenues ofRs.1.86 lakh crore between 2004 and 2009.

Manmohan Singh had even delivered a televised defence after the CAG report was tabled. Such has been the storm over the issue that in August this year, the Prime Minister lost his cool in Parliament after opposition MPs - who had continuously disrupted Parliament over missing coal ministry files - questioned his integrity.

The CBI is probing allegations of irregularities in coal block allocations to power and steel companies since 1993 in a Supreme Court-monitored investigation.