Coal on its face

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The probe into a massive scam in one of Asia’s largest mines has seen some bizarre flip-flops by the CBI. Brijesh Pandey investigates

Coal stained As a Joint Director, CBI chief Ashwani Kumar (above) had given a clean chit to the bunglings in the Dipika-Gevra mines
Photo: Coal India Limited

WHEN THE CBI raided six premises of Aryan Benefication Coals Pvt Ltd (ACB) and South Eastern Coalfields Limited (SECL) in Chhattisgarh and Haryana on September 16, it was seen as the first concrete action taken by the agency in a case that has dragged on for close to a decade. After all, the case was billed as the biggest coal scam — worth several thousand crore rupees — in one of Asia’s largest coal mines, the SECL-owned Dipika and Gevra mines in Korba district of Chhattisgarh.

The CBI gave details of the raids to the media, but what it did not reveal was the fact that in the last five years the agency itself had given three clean chits — one by the current CBI director himself — to ACB and SECL. Documents in possession of TEHELKA show how the case has meandered without any conclusion.

While the scam was on for quite some time, it was only in 2003 that the then chief minister of Chhattisgarh, Ajit Jogi, sought a CBI inquiry into the alleged sale of 4 lakh tonnes of good quality coal under the garb of reject coal by Aryan washery to Hindalco, the aluminium major owned by the Aditya Birla Group.

A privately-owned company, ACB’s agreement with the SECL is restricted only to washing of coal produced by the public-sector undertaking (PSU), a subsidiary of Coal India Limited (CIL). So, how did a private player become so powerful as to virtually monopolise the coal business in Chhattisgarh and Orissa?

Here’s how the new coal mafia — a refined version of the Dhanbad variety— operates in Chhattisgarh. ACB has a stake in the entire gamut of the coal business in Chhattisgarh — from washing to transportation to (illegal) sale of the black gold. Its subsidiary, Aryan Washery, operates from within the SECL mining area. While SECL does the blasting in the Dipika-Gevra mines, the lucrative business of transporting raw coal from the pits to the Aryan Washery is handled by more than two dozen Ex-Servicemen (ESM) companies — under a scheme of the Defence Ministry, in association with the Coal Ministry, to rehabilitate retired army personnel.

Several probes into this coal scam have pointed out that the ESM companies operating in the Dipika-Gevra mines are all fraudulently owned by ACB or its associates, and that they are all involved in the pilferage of superior grade coal, causing losses of thousands of crore rupees to CIL.

Documents with TEHELKA show how these ESMs — registered in Delhi, Haryana and Chandigarh — are linked to Sindhu Holdings Ltd, the group company that owns ACB. The people who own and manage these companies are ex-servicemen Captain Abhimanyu Sindhu, his brother Dev Suman Sindhu, Rudra Sen Sindhu, Veer Sen Sindhu and others. Incidentally, Dev Suman also happens to be the son-inlaw of the late Sahib Singh Verma, BJP leader and former chief minister of Delhi. In fact, Verma’s son Parvesh is also a director in the company.

So, Ajit Jogi was not the only one to seek a CBI probe. On January 14, 2004, the Chief Vigilance Officer (CVO) of Coal India, Shashi Prakash, requested a CBI probe to unearth the nexus behind the large-scale coal pilferage in the Dipika-Gevra mines.

The CBI report came as a shocker to the CVO. In its report submitted on September 16, 2004, DIG Sudhir Mishra of the CBI stated: “All the allegation against Aryan coal, including the allegation of selling coal to Hindalco through its associated companies and the allegation that the list of 26 ESM companies operating in the SECL area having same address were unsubstantiated and no evidence of cheating or any other criminal act was found. Therefore the complaints along with other complaints are treated as closed.”

Not convinced with the clean chit, the CVO wrote to the CBI again: “There is an enormous scope for pilferage of coal. It has been established that one single group is operating in this area as far as transport is concerned. The mine management has virtually surrendered their control to one group as far as loading and transportation are concerned. Therefore we suggest that CBI have a re-look into the matter.”

COAL INDIA’S CVO was not the only person concerned with the bleeding of the PSU’s wealth. During a hearing of an environmental case, the Supreme Court took suo motu cognizance of large-scale fraud going on in the Dipika-Gevra mines and appointed a Central Empowered Committee to look into the matter. Reporting about the “mass-scale bungling”, the committee said, “Under the guise of rejected coal, superior quality of coal is being sold to private parties and the difference is received in cash.” The committee also noted that “there is a direct collusion between senior managers of SECL and Aryan Washery”.

The CBI reinvestigated the matter and this time came up with a gem of an advice. In a letter written in September 2005, DIG AK Pateria of the CBI stated, “The CBI is of the view that the issue raised by the CVO and Coal India Ltd are required to be addressed from the preventive vigilance angle. It would be appropriate for Coal India Ltd to put in place a functional internal control mechanism to stop pilferage of coal and illegal sale of good quality coal.”

The CBI’s attitude towards the investigation took the Coal Ministry by surprise. On July 22, 2005, Coal Secretary PC Parikh wrote a scathing note to the then CBI Director US Mishra. Parikh lambasted the CBI for not taking up the matter with the seriousness it deserved, despite the SC-appointed committee pointing to a nexus between the higher management of SECL and Aryan Washery.

Based on this letter, the CBI conducted surprise checks and raids on SECL premises. But the irony was that the senior management of SECLwas informed about it in advance and as a result no evidence of corruption was found. The result of this surprise check was dutifully informed to the Coal Ministry.

THEN CAME the next farce in the case. In a letter to Coal Secretary HC Gupta, the then joint director and current CBI chief, Ashwani Kumar, repeated what his junior had written about the implementation of internal check mechanism and also stated that “no worthwhile investigation can be done on the allegations which are either vague or beyond the purview of CBI and pertains to private companies”.

The CBI raided the offices of South Eastern Coal Ltd. But SECL managers had been tipped off

Later, in April 2007, the Coal Ministry constituted a five-member parliamentary committee headed by JD(U) MP Rajiv Ranjan Singh to look into the system of transportation in SECL. In its report submitted in September 2007, the committee made some stinging observations:

• It is clear that the transport system in SECL is under the control of some ESM companies and Aryan Washery. And certain individuals are running the show from behind the scene.

• All the ESM companies operating out of SECL belong to Delhi, Haryana, Punjab and Noida. Not even a single company was from Chhattisgarh or Madhya Pradesh, clearly indicating foul play.

 A CBI inquiry should be ordered to investigate the real culprits behind the ongoing system. It should also investigate the allotment of coalfield land to a private company for installing a washery and illegally increasing its capacity. In response to this report, the Prime Minister, who held the coal portfolio then, approved the following Action Taken Report:

“The recommendation of the committee assumes importance in the context of persistent allegation of nexus between Aryan Washery and ESMcompanies being only front companies of the said washery. It may be appropriate to ask the CBI to examine all relevant records and documents concerning sourcing of financing and the ultimate beneficiary of the work allotted to ESMcompanies to find out whether they are being used as front company by other vested interests.”

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How the mines were pilfered

Aryan washery signs a contract to wash coal in Dipika-Gevra mines. Starts selling good quality coal under the garb of rejects

More than two dozen esm firms transporting coal from pit to washery are in reality front companies of aryan

Aryan works in collusion with the senior management of secl. Despite objections by the cvo, manages to get clean chit from CBI

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Meanwhile during a hearing on the report of the Empowered committee, the Supreme Court on November 30, 2007 made a written observation: “As per the direction, there can only be treatment of the coal and an agent shall not sell any produce after the washing process is over. It is specifically directed that the agent cannot sell the coal under the garb of reject. It is pointed out that there has been gross violation by M/S Aryan Coal by selling the coal under the garb of reject, after the washing process is over.”

The Coal Ministry, in a sworn affidavit in the Supreme Court, clarified that it had never permitted Aryan Coal to sell reject coal after its washing. The circular dated January 2, 1999, specifically prohibited sale of coal rejects by the coal washeries to any party.

Despite all this, the CBI could not come up with any worthwhile investigation. Finally, on August 17, 2009, Lok Sabha MP Yashbir Singh wrote a letter to Home Minister P Chidambaram, detailing how despite several probes and recommendations no action could be taken by the Coal Ministry on the ground that the CBI had given a clean chit to Aryan Washery.

It was based on this letter that the CBI conducted raids across Chhattisgarh and Haryana in September. Whatever the outcome of its latest move, this case raises several questions about the CBI’S functioning. For instance:

 Why has it taken the CBI five years to wake up to the facts of the case? Why did it not conduct a detailed examination of the extent of the fraud?

 If incriminating documents are found and a case is registered, will the CBI take action against its staff, who had maintained that there was no clear case against Aryan Washery or the ESM companies operating as its front?

 Why and on what basis did the CBI choose the time frame of April to July 2006 for its probe? What happens to the rest of the period when pilferage went on unabated?

• Why were the private companies out of purview of the investigation, as argued in two letters written by the DIG and the current CBI director? And if that was the case, then how come this raid?

The CBI refuses to respond to these questions. But going by its past record, it seems the truth behind its curious clean chits will remain buried in the murky mines it never cleaned up.

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