MAC: Mines and Communities

Adani escapes liability even as CBI prosecutes others for similar coal fraud

Published by MAC on 2019-02-11
Source: The Caravan

The following well-researched article throws several Indian company names at the reader, most of which will be unknown (to non-Indians at least).

However, Adani is surely not among this number. [For latest posting. see: Adani coal project critised by United Nations  ]

Its legendary notoriety for dirty mining, public unaccountability, fiscal corruption and illicit profit-taking is, once again, demonstrated by the evidence presented here.

When, oh when, one might ask, will this mega-mining enterprise itself be rejected by the government that holds it close to its own "treasure" chest?

[Comment by Nostromo Research]

Adani escapes liability even as CBI prosecutes others for similar coal fraud

Nileena MS

The Caravan

9 February 2019

The lack of government oversight, and preferential treatment to the Adani Group has raised serious questions on the purported reforms in the scam-riddled coal sector.

On 4 January 2018, the Central Bureau of Investigation filed a chargesheet in one of several cases under investigation in what is popularly known as the “Coalgate” scam. In the chargesheet, the CBI accused the state-owned Karnataka Power Corporation Limited, or KPCL, its private partner EMTA and their joint venture, Karnataka EMTA Coal Mines Limited, or KECML, of irregularities in the allocation and mining of six coal blocks in Maharashtra. The CBI has accused these three companies of committing illegal activities that bear a striking resemblance to the actions of a joint venture connected to Adani Enterprises Limited. Yet, the Adani Group company continues to evade scrutiny.

In September 2014, the Supreme Court had declared a total of 214 coal-block allocations illegal, including the six allotted to KPCL. The CBI has been investigating irregularities in the allocation and mining of these coal blocks—some of which go back to 1993—since 2012. During the course of its investigation, in March 2015, the CBI booked the chairpersons and directors of KPCL, EMTA and KECML for violating the terms of allocation, as defined by the ministry of coal, and selling coal rejects—lower-grade coal sifted out during the purification process—in the open market. Three years later, the CBI established that KPCL, EMTA and KECML were all involved in a fraud—it accused KECML of lying to the government saying that coal rejects from their mines had no value even as EMTA sold the very same rejects to a private coal company.

In “Coalgate 2.0,” the cover story of The Caravan’s March 2018 issue, I reported on a similar fraud perpetrated by another trio of companies—Rajasthan Rajya Vidyut Utpadan Nigam Limited, or RRVUNL, a public-sector undertaking, its private partner Adani Enterprises Limited, or AEL, and their joint venture, Parsa Kanta Collieries Limited, or PKCL. AEL is the flagship company of the Adani Group, whose founder and chairman is Gautam Adani, an industrialist known to be close to Prime Minister Narendra Modi.

The CBI chargesheet, a copy of which is available with The Caravan, reveals striking similarities between the functioning of KPCL and RRVUNL’s joint ventures, or JVs. But the CBI has only booked KPCL’s JV which was shut down following the SC order, whereas RRVUNL, AEL and PKCL have all escaped legal scrutiny. The investigating agency’s failure to indict these companies is particularly conspicuous because The Caravan’s March 2018 report, which revealed the irregularities in the functioning of PKCL, relied almost entirely on documents available in the public domain.

The Supreme Court’s 2014 judgment nullified all JV agreements between state public-sector units, or PSUs, and private parties. As a result, KPCL, like all other state PSUs, annulled its agreement with EMTA. RRVUNL, a power company of the Rajasthan government, is the only PSU that has continued its JV agreement—which it signed with AEL in 2007—in complete violation of the apex court’s verdict.

Nileena MS is a reporting fellow with The Caravan.

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