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Coal scam: Brace for an anti-climax

Monday, 3 September 2012 - 11:00am IST | Agency: dna

For a scandal that has rocked the political system and paralysed Parliament, five FIRs against mid-level companies and faceless mid-level bureaucrats will be a stunning anticlimax.

Our investigation this week into the role of Union Tourism Minister Subodh Kant Sahai in influencing coal allocations to a company with which his brother is associated typifies the key ingredients of the coalscam: political influence hiding behind the corporate veil and obfuscating facts. To summarise: the BJP’s original charge against Sahai was that he wrote a letter on February 5, 2008 to the Prime Minister’s Office asking for the PM’s ‘personal intervention’ in the application of a company, SKS Ispat and Power that applied for two coal blocks for its steel plants in Chhattisgarh and Jharkhand. The PMO passed it on to the coal ministry on February 6, 2008 and on the same day, SKS was allotted a mine.

Sahai’s defence was based on a Delhi High Court order of 2010 which cleared him, his brother and the PMO of any wrongdoing. The court order says that Sahai had nothing to do with the allotment since he had written a letter for a coal block for a steel plant.  And that the coal block which was allotted the next day (known as the Fatehpur block) was for a power plant. The court says that the decision to award the Fatehpur block was taken six months before the letters were written. The court’s observations against the petitioner who made the charges, a rival mining company, were so strong that it got the media to partially back off.

A closer reading of the evidence quickly exposes the weak links in his defence. The court order was only in response to a petition that challenged the allotment of the Fatehpur block. What SKS and Sahai omitted from their explanation is how this explains the allotment of the second coal block, known as the Vijay Central coal block. The sequence of events leading to the allotment of Vijay Central establishes a clear conflict of interest. On February 7, a day after the PM forwarded Sahai’s letter to the coal ministry, the ministry’s steering committee held a meeting to take a final decision on allotting the Vijay Central block. The official minutes show that Sahai’s brother Sudhir attended the meeting as SKS’s director. Five months later, on July 3, 2008, SKS was awarded the Vijay Central block!

How does Sahai explain this? He doesn’t. He simply falls back on the court order, even though that is for a different block.

His office and SKS tried to play down the role of his brother in the company. An SKS official called me on the phone the day we broke the story, suggesting that Sahai’s brother, Sudhir, is not really an employee of SKS. I told him that might amount to perjury since the minutes of the screening committee, which show Sudhir Sahai as a director of SKS, are part of the High Court’s order. He hastily got off the phone. One can try and imagine the dilemma at this point. There are only two kinds of directors: a) a board director, in which case, Sudhir Sahai needs to be listed as such on the Ministry of Corporate Affairs website. He is not; or, b) an executive director, which means he draws a salary from SKS. SKS eventually mailed us saying Sudhir Sahai is ‘executive director, honorary capacity’, perhaps the most unusual moniker in HR history.

Minister Sahai eventually fell back on the time-tested argument, that this is a political conspiracy against him because the company that sued him has BJP links.

The latter part of this statement is factually correct. Prakash Industries — that was jointly awarded both the Vijay Central and Fatehpur coal blocks along with SKS — and that went to court alleging that SKS got the lion’s share of both, is run by VP Aggarwal. His brother, JP Aggarwal, heads the Surya Group of Industries and is a senior figure in the BJP-RSS ranks. They have denied that their BJP links have anything to do with their allotment of three coal blocks in the BJP-run state of Chhattisgarh. The CBI raided Prakash Industries in 2010 on charges of mining excess coal and selling it in the black market. They have also been charged with forging documents and bribing officials. Prakash has denied these charges, saying it is being victimised for its court cases against Sahai, a sitting union minister.

Those expecting similar revelations from the ongoing CBI probe into corruption in coal allocation should brace themselves for disappointment. A CBI source I met last week told me that, yes, they have sensed the presence of political proxies/cronies but they aren’t getting into it right now (or at all.) They will start by filing FIRs against five companies which have been allotted coal blocks. The charges are largely technical: that they inflated their net worth to secure coal blocks or concealed earlier coal allocations. As for the government, the FIR may only refer to ‘unnamed public servants‘ from the various governmental agencies involved in the screening process: the coal, steel, power ministries and representatives of state governments, who colluded with these companies. For a scandal that has rocked the political system and paralysed Parliament, five FIRs against mid-level companies and faceless mid-level bureaucrats will be a stunning anticlimax.

Sreenivasan Jain is Managing Editor, NDTV. He anchors the ground reportage show, Truth vs Hype, on NDTV 24x7

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