India Inc upset with Birla’s mention in coal scam FIR

Kumar Mangalam Birla

The deep, dark coal scam has dawned new colours with the CBI’s first information report pointing fingers at one of India’s top industrialists – Kumar Mangalam Birla. His name crops up even as the investigation on the PM’s role in the scam is still being determined by authorities as Dr Manmohan Singh held the post of the coal minister during the period of mine allocation to the Birlas and many other corporations. But this postscript to an ongoing investigation once again puts the spotlight on the core issues – is the focus on Birla a way to deflect attention from the demands to probe the PM’s role in the scam? Is the investigation once again going to spin this story as a victim of the system that has long been founded on the bedrock of the corruption nexus within political parties in giving permissions for resources? Is it fair to implicate one industrialist (without taking a judgmental call on whether he was or not involved) for what has prevailed as a functioning system for getting permissions and allocations of resources in the country?

An FIR was filed by the CBI against Kumar Mangalam Birla of the Aditya Birla group charging him with conspiracy. The agency has alleged that undue favour was shown in the allocation of coal blocks to Birla’s Hindalco in 2005. This allotment was during the period when the prime minister himself was holding the portfolio of the coal ministry.

“Dragging someone like Birla’s name in this is an absolute shocker,” says Sumant Sinha who heads the renewable energy company Renew Power. Upset with Birla’s mention, Deepak Parekh has reportedly expressed disgust at the way “innocent people are being harassed when many fraudsters are scot-free.” This promises to be another blow to the mood and trust of India Inc in the governance systems of the country at the moment. Corporate honchos have been hassled with the idea that they, their companies or their families can come under the scanner just because the “government feels like going after anyone and everyone who is making some money,” says one CEO. “This is going to force industrialists out of India and push them overseas.”

The Birla Group in its defence has said that the reality of the matter is very different from what has been projected. D Bhattacharya, Managing Director of Hindalco said “the application for the Talabira II mine was made in 1996 by Indal, which was acquired by Hindalco in the year 2000. The actual allocation of the mine was done in November 2005, which is nine years after the first application was made.”

The bottomline is that such incidents reek of tissue-deep systemic issues in doing business in India. Permissions are long drawn and shoddy, rules are not clear, the norm today can be a crime tomorrow, corporations are grappling with a ‘to do or not to do’ syndrome when it comes to doing business the political way. One doubts that any company would admit that they run departments that are meant to keep track of political changes to appease parties at the Centre. No doubt industrialists in India have played the system as well, when the going was good. India’s 2G scam is as much an example of corporate exploitation of the system as is of systemic flaws within decision making members of the political system. However, to put the blame squarely on business tycoons is unfair. As one executive expresses, “the rules of the game are set by the government through policy. If a permission is given and no objection is raised during the time of allotment then what has changed since then and now?” Could this mean government policies are flawed or vague? On the other hand, with practically every single corporation under an investigation, it is proof that companies have learnt to benefit from the system when it remained fraught with loopholes. Reliance, ADAG, Tata, JSPL, Essar, Adani, Sajjan Jindal’s JSW, Bharti are all facing questions, investigations in one matter or the other. Would it be naïve to assume India Inc hasn’t participated in extracting the riches at lower costs in case of resources? Is this humbling of heroes of Indian business overdue? However, it would also be prudent to add that such a swathe of enquiries begs to know if so many corporations are to blame, could the problem not lie in the policies?

At the end of the day, no matter what the final outcome is in this case around Birla, there is one definite loser – India’s image. Another case symbolic of how muddled up the ways of doing business are – whether to procure raw material or to set up factories. Charging industrialists or letting leak information of them being under the scanner without a complete trail of evidence cannot benefit the idea of investing in India. The incident may once again put the focus back on to the business-political relationship, but the irony is nothing may change.


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