19Dec

Indian Coal Scam – Mother of all Scams

WHAT WAS THE SCAM?

Coal block is the largest political scandal till date and is referred to as the “Mother of all scams”.

Coal blocks allocations by the government between 2004 and 2009 were found to be issued without competitive bidding and at very low prices because of which government suffered a loss of roughly ₹ 10 Lakhs Crores but further amended to ₹ 1.85 Lakhs Crores by the CAG in its final draft report.

CBI officials have said that bribery case may be involved.

CHARGES IN CAG DRAFT REPORT

First Charge – In 2005 the Government had the legal authority to allocate coal blocks by auction rather than the Screening Committee, but chose not to do so.

The beneficiaries include some 100 private companies, as well as some public sector units, in industries such as power, steel and cement. The Income Tax Department was also roped in to look into the financial frauds and follow the money trail.

Second CAG charge – Windfall gains (a type of income which is very high and unexpected) to the allocatees were ₹ 1.85 Lakh Crores.

 

CHANGE IN CAG DRAFT REPORT

The biggest change from the Draft Report was the dramatic reduction in the windfall gains from ₹ 10 Lakhs Crores to ₹1.5 Lakh Crores This change is due to:

Final Report considers “extractable coal” (i.e. coal that could actually be used in production) taking into account losses that occur during mining and washing the coal

“Standing Committee on Coal and Steel tabled in Parliament on 23 April 2013 stated in its latest report that all coal blocks distributed between 1993 and 2008 were done in an unauthorized manner and allotment of all mines where production is yet to start should be cancelled”

 

LEAK OF INVESTIGATION DETAILS

Supreme court ordered CBI that investigation details must not be shared with any member of the government yet on April 26 the CBI director Ranjit Sinha submitted an affidavit in the Supreme Court stating that the coal scam status report prepared by the investigating agency was shared with the law minister Ashwani Kumar “as desired by him”, joint secretary-level officers from the Prime Minister’s Office (PMO) and the coal ministry before presenting it to the court on March 8.

As a result of that, on April 29, CBI stated to Supreme Court that 20% if its original report was changed by Government. Counsel Prashant Bhushan (from AAP political party) said there were efforts to shield PM

 

MISSING FILES

Coal Allocation (I & II) sections are responsible for maintaining all records of allocation of coal blocks. Number of files missing were 157 benefitting three sets of people– the beneficiary companies (and individuals) who received coal block allocations; the screening committee (based on its deliberations) and the minister and his office (bureaucrats and officials).

 

CONCLUSION

The investigation is still going on. CBI wanted to question 5 secretary level rank officers in Union and state government where the blocks were allocated but couldn’t due to requirement of approvals which were delayed.

Supreme Court said on 17th Dec 2013 that CBI doesn’t require clearance to prosecute bureaucrats in court-monitored probes. So there is a hope that the process get sped up.

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