JSW Steel faces CBI probe over Karnataka capers

Dealing a severe blow to steel giant JSW Steel on Friday, the Supreme Court ordered a probe by the Central Bureau of Investigation (CBI) into instances of alleged illegal mining by the company in Karnataka during the tenure of former chief minister BS Yeddyurappa.

Accepting the recommendations of the Central Empowered Committee (CEC) report submitted to it on April 20, the apex court directed the CBI to investigate the alleged hideous links between a donation of Rs10 crore paid by a group company South West Mining and receipt of illegal mineral ore by JSW Steel.

The news sent the share price of JSW Steel tumbling almost 8% on Friday in early trades and later closed 5% down.

However, the company, which currently runs a 10 million tonne steel plant in Vijayanagar in Karnataka, issued a statement immediately.

“It has not done any illegal activity nor connected with any wrongdoing. It has full faith in the judicial process and its books are open and it will fully cooperate with the investigating agencies,” it said in the statement.

JSW Steel is, in fact, the victim of alleged illegal mining, it said.

Seshagiri Rao, joint MD and group CFO, further added that the group follows highest standards of corporate governance. JSW Steel is one of the biggest steel companies in the country which has so far no access to captive iron ore mines and operates at zero backward integration.

The CEC report had said that two major corporates —JSW Steel and Adani Enterprises — had been party to illegal mining cases during the reign of Yeddyurappa, between 2006 and 2010.

It had been alleged that Adani Enterprises was exporting the illegally obtained iron ore through the Belekeri Port in Uttara Kannada district, where it was one of the operators.

All these allegations were part of the Lokayukta report submitted on July 27, 2011 to the apex court.

The report had also said that JSW Steel had received about 1.3 million tonne of illegal ore which led to a loss of Rs324 crore to the state, and was also shown undue favours by the state government.