Author: Yatish Yadav | ENS
Published Date: Jan 13, 2013 9:17 AM
Last Updated: Jan 13, 2013 9:17 AM
After the Central Bureau of Investigation (CBI), it is now the turn of the Enforcement Directorate to launch an investigation against private companies which were allocated coal blocks by the UPA government in violation of established norms and procedures.
On December 28 last year, the ED registered an Enforcement Case Information Report (ECIR), which is equivalent to an FIR, against Hyderabad-based Navabharat Power Pvt Ltd, Grace Industries, their directors and unknown officials of the Ministry of Coal under the Prevention of Money Laundering Act. The ECIR throws some startling revelations in the case. It revealed that Navabharat Power had misrepresented and concealed facts in the application form in order to obtain wrongful gains in connivance with unknown public servants.
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The ED also named directors of Navabharat - P Tivikrama Prasad and Y Harish Chandra Prasad - as accused in the case.
“CBI inquiries have revealed that post the allocation of the coal block, the promoters and shareholders of Navabharat Power sold off their entire shareholding in July, 2010 to Essar Power Ltd and its subsidiary company at a huge profit of over `200 crore,” the ECIR stated.
This alleged deal was in clear violation of the government guidelines, which says that “all coal mined from the captive block shall exclusively be used in the proposed end use project for which the said block has been allocated” and that “in case of any slippage in implementation of the end use project or the captive coal mine development project as per the schedule of implementation/bar charts submitted and agreed to by the ministry of coal, the said block shall be de-allocated without any liability to the government/its agencies whatsoever.”
Navabharat Power had been was allocated the Rampia and dip side Rampia coal block in Odisha, jointly with six other companies by the 35th screening committee in a meeting held in September 2007 to set up a power plant. Similarly, Grace Industries, the other company under scanner, was allocated the Lohara East coal block jointly with Murli Agro Products Pvt. Ltd by fraudulently claiming its net worth to be `120 crore.
“Post the allocation of the coal block, the promoters and shareholders of Grace Industries sold off their entire holding to Sanvijay Rolling at a stated profit of `20 crore,” the ECIR stated. Criminal case for money laundering has been registered under PMLA against Grace Industries and its two directors- Mukesh Gupta and Seema Gupta.
In case of Navabharat Power, ED officials said the company’s promoters fraudulently claimed the net worth of Singapore-based M/S Globleq Singapore Pvt Ltd in order to embellish its claim for allocation of coal blocks. “The use of net worth of `1,778.14 crore of Globleq constitute an offence of cross border implications under PMLA,” ED officials said.
During the investigation it was also revealed that Navabharat, during its presentation before the screening committee on June 23, 2007, claimed the net worth of `1,05,740 crores of Suez Energy International Ltd. However, the enquiry conducted by the CBI revealed that Navabharat Power had no legal basis in the form of any documents, presented to the screening committee or enclosed with the application.
The ED ECIR says that by claiming the net worth of Suez Energy, it qualified the criteria of having minimum net worth of `0.5 crore per mega watt. It proposed a capacity of 2240 Mega Watt, and with the claim of Suez money, it qualified for the recommendation of the ministry of power.
“Officials of the ministry of coal, in pursuance of a criminal conspiracy, wilfully and purposefully did not scrutinize the documents regarding the false claims and concealment of facts by Navabharat Power and facilitated the company in getting undue advantage in allocation of the coal block,” the ECIR added.
ED officials said the case of Grace Industries was more shocking. The company was neither recommended by the state of Maharashtra nor the ministry of steel. The CBI inquiry revealed that the application of Grace Industries was not even received in the ministry of steel for its comment. “During the meeting of the screening committee on September 7, 2006, Grace Industries provided misleading information before the concerned authorities of coal ministry regarding existing capacity of sponge iron production,” ED officials added.
The CBI swung into action in September last year after the Comptroller and Auditor General’s audit report on coal block allocation blew the whistle on the Prime Minister’s Office’s supervisory lapses, nepotism and irregularities in awarding contracts to companies that did not have adequate pockets. The national auditor, while indicting the UPA government in its report, had observed that the private companies which were allocated coal blocks would make a windfall gain of `1.85 lakh crore.
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