The Kumar Mangalam Birla story
Why industry has no business commenting on the unfairness of the investigation against Birla and Hindalco
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Kumar Mangalam Birla is an honourable man, so, why is he being persecuted?
That’s the question being asked by several businessmen who are, not surprisingly, standing up for one of their own the way I wish journalists would for theirs. And that’s also the sentiment being expressed by the Union commerce minister, who is worried that such acts send out the wrong message to foreign investors.
Do agencies such as the Central Bureau of Investigation (CBI) and the Comptroller and Auditor General (CAG) exercise such discretion?
It would seem they do. After all, the one instance where promoters benefited after their company was allotted spectrum in the now-infamous 2G case was ignored by the government’s auditor because it involved a Tata group company. Tata Teleservices was the company in question and it sold a stake to Japan’s NTT DoCoMo. Both Swan Telecom and Unitech Wireless issued fresh equity (which means the money came into the company, and didn’t go to the promoters).
Should CBI have done the same with Birla?
After all, he did only what most chairmen of groups would have done in a similar situation.
His group applied for a coal mine, but didn’t get it. So, he wrote to the coal secretary explaining why it should have got the mine, and followed up with a meeting. It’s hard for government employees to say no to CEOs (I present as Exhibit A, the loans extended by state-owned banks to Kingfisher Airlines). And so, by the then coal secretary’s own admission, he found merit in Birla’s representation, and decided, the way it is usually done in this country, that the mine would be shared between the original allotee Neyveli Lignite Corp. (fortunately a state-owned company), and Hindalco Industries, the Birla group company that applied for the mine.
Is a reversal of decision adequate grounds for CBI to file a first information report (FIR, essentially indicating that the matter is worth investigating) and start its work?
I would think it is, although I wish the federal investigative agency’s officers would stop leaking tidbits about unaccounted money being found on the premises they raided in connection with the case. India’s investigative agencies haven’t exactly covered themselves with glory with similar disclosures in the past – such as one about the tax dues of a stud farm owner that, if they had been estimated accurately, would have made a dent in the country’s fiscal deficit.
A digression here: I also wish the media would learn to distinguish between an FIR (a wholly Indian notion that just means the start of an investigation and doesn’t indicate guilt) and a charge sheet (which presents the charges arrived at after the investigation). The legal process starts after a charge sheet is filed.
What Birla’s fellow businessmen think about all this is actually irrelevant.
A reversal of a decision is worth looking into—even if such things are common in India.
Nor will this send a wrong message to foreign investors. The tax cases involving Vodafone and Shell have sent out all the wrong messages that needed sending out. What the complaint filed against Birla tells foreign investors is that any change in a decision arrived at after due process will be investigated because there is a chance that it might have been prompted by some sort of inducement.
I personally wish CBI would also get its act together and go after the many unheard-of companies that were allotted mines and which seem to have some links to politicians, but that doesn’t change anything as far as its current investigation against Birla, Hindalco, and the former coal secretary, is concerned.
There were two other notable things about this whole incident.
The first was the Aditya Birla Group’s speed of response (or lack of it).
The first response came almost 10 hours after Mint first broke the story at 10.32am on Tuesday (yes, ahead of the television channels too, at least as far as I know). An Indian multinational that operates across markets should have realized the magnitude and the gravity of the issue and responded in minutes, not even hours. Delays such as this are unforgivable and only reinforce what I said at a meeting of communications professionals in Pune a few weeks ago (making myself unpopular in the process—a bad habit that I am sure I will one day overcome), that most public relations people are still living in the analogue world.
The second were the comments about how Hindustan Times (like Mint, published by HT Media Ltd, whose promoters are part of the larger Birla family) and Headlines Today (part of the India Today Group in which the Aditya Birla Group has a stake ) didn’t cover the story at all, and Mint gave it only one column on Page 1 (unlike other papers that played it as the lead). I have nothing to say about Hindustan Times and Headlines Today, although there are times when Mint too has missed stories. Indeed, only on Wednesday we missed the big story on the Western Ghats (a much bigger story than Birla, and we did try to catch up with it online later in the day) and on Thursday, we were guilty of simply not following up a story on NVD Solar we broke last fortnight.
But to come back to the single column issue, even a website run by Mint’s media columnist Sevanti Ninan was snarky about Mint’s placement of the story. To me, much of this again reflects an analogue bent of mind combined with something far more insidious – that Mint deliberately downplayed the story. From its inception in 2007, and, especially in the past 13 months after becoming an integrated newsroom in the true sense of the word, Mint has followed a web-first approach that allows its editors to take some interesting calls on Page 1 stories (I’d guess that in the past six months, we may have carried opinion pieces on Page 1 at least 20 times). On that day, we played what I thought was a provocative analysis of the results of Tata Consultancy Services Ltd and Infosys Ltd as the lead (it was written by a man who is, to my mind, the finest IT news analyst in the country).
And just for the record, there was no attempt by anyone to get Mint to suppress the story.
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