New Delhi: The Central Bureau of Investigation (CBI), which is probing alleged irregularities in the allocation of coal blocks to private companies between 2006 and 2009, said it would extend the investigation to companies that have been allotted blocks starting in 1993.
The CBI said at least 50 additional companies could be probed as part of the widened investigation.
The decision follows the Central Vigilance Commission (CVC) on Monday forwarding a letter written by seven parliamentarians demanding an investigation of all coal block allocations since 1993 to the CBI.
On 5 September, the Congress party Lok Sabha members Sandeep Dikshit, Harish Chaudhary, Ravneet Singh, Choudhary Lal Singh, Manicka Tagore and Raghuvir Singh Meena wrote to the CVC and the coal ministry that blocks allotted between 1993 and 2004 be investigated.
That would cover the coalfields allocated in 1998-2004, when the Bharatiya Janata Party-led National Democratic Alliance (NDA) was in power, and in 1996-98, when a coalition called the United Front ruled the country. The Congress party lost the 1996 general election and returned to power in 2004.
Coal block allocations made during the rule of the Congress-party led United Progressive Alliance (UPA) have been under scrutiny since the Comptroller and Auditor General of India said in a report released in August that such allocations had caused the national exchequer a loss of Rs.1.86 trillion.
“We have received a letter from the CVC today (Monday) asking us to probe allocation of coal blocks since 1993,” a senior CBI official said on condition of anonymity. “Within a week, we will register a fresh PE (preliminary enquiry) and start investigation. This will go side by side with the current investigation into seven FIRs (first information reports) registered by us in coal allocations made between 2006 and 2009.”
Another CBI official independently confirmed the development.
“... it appears that there were many cases of malpractice while allocating coal blocks between 1993 to 2004. Further, in many cases where joint ventures have been formed between state government corporations and private parties there is information that many of these were done through favours to certain parties and under political pressure and due diligence was not followed in selection of partners by state government corporations,” the letter written by the Congress parliamentarians said. “It, therefore, appears that all coal blocks allotted since 1993 should be investigated by the CBI specially looking at systems through which state governments selected private companies whose names they forwarded to government of India.”
They alleged that some companies may have been favoured under political pressure.
Arvind Mahajan, a partner at KPMG in India, said the perception is that the lack of transparency was higher in the earlier period of allocation. “So, although the number of blocks allocated may not be as many as in the later period, the level of processing was not as high as in the later period. It was only after the Electricity Act of 2003 that the power sector saw private sector interest. Coal process too have gone up only since then,” he said.
A top coal ministry official, speaking on condition of anonymity, said that a copy of the letter had been forwarded to the ministry, which, in turn, had been sent to the CVC on 19 September.
According to information available on the coal ministry’s website, between 10 August 1993 and 6 December 2005, 69 coal blocks were allocated.
On 4 September, the CBI booked cases against five companies for suspected irregularities in the controversial allocation of coal blocks and conducted raids in 11 cities. On 22 September, the agency registered cases against two more companies.
Cases of criminal conspiracy and cheating had been registered against Vini Iron and Steel Udyog Ltd, Jas Infrastructure Capital Pvt. Ltd, AMR Iron and Steels Pvt. Ltd, JLD Yavatmal Energy Ltd, Navabharat Power Pvt. Ltd, a unit of the Essar Group, Grace Industries and Vikash Metal and Power Ltd. The five were among companies that were allotted coal blocks during 2006-09, when Prime Minister Manmohan Singh also held charge of the coal ministry.
The government has already cancelled at least seven coal block allocations on grounds of non-performance, and could cancel the allocations of as many as six others, on the basis of recommendations made by an inter-ministerial group (IMG) that is looking into the issue.
The IMG is set to meet again in the second week of October to decide on the fate of blocks allotted to government-owned companies where no development has taken place so far.