MCA asks SFIO not to initiate prosecution against Sesa Goa

In a relief for Sesa Goa, the Ministry of Corporate Affairs has asked SFIO not to initiate prosecution against the company in a case related to allegations of over and under invoicing exports and imports.

The Ministry has said the company has not been guilty of any corporate impropriety.

In a recent communique to the the Serious Fraud Investigation Office (SFIO), the Ministry said that "no prima facie case has been made out against these companies (Sesa Goa and its subsidiary Sesa Industries, now merged) for prosecuting for the alleged offences under Indian Penal Code".

"... Considering the opinion of Department of Legal Affairs and Additional Solicitor General and supplementary investigation report, SFIO is advised not to file prosecution for alleged violations attracting IPC provisions," the Ministry said.

Accordingly charges of criminal offences against company's management, including its Managing Director P K Mukherjee, would also be dropped, it said.

The charges against Sesa Goa, the largest private sector iron ore mining firm and exporter, included excess payment of commission to sale agents, over-invoicing of import of coking coal and under-invoicing of iron ore exports amounting to about Rs 1,000 crore during 2001-02 to 2006-07.

When asked for comments, Sesa Goa MD Mukherjee said he has no idea about the government action and he comes "to know all these things from media only."

"We had written to the ministry in the past to know what is the latest status (of the case) on the representations made by us in April-May, 2011 on the SFIO report. We are only aware that a suit has been filed in the district court of Panaji on a couple of company law issues," he said.

SFIO, which was probing the case since October, 2009, had already cleared Sesa Goa and its subsidiary Sesa Industries against the charges in its second report, given last year. The investigating agency had sought directions from the Corporate Affairs Ministry on the matter.

"Percentage of commission and rates of invoicing in import of coking coal and export of iron ore for sale of iron ore by Sesa Goa were nearly at the same levels according to the prevailing market trend during the period from 2001-02 up to 2006-07," second report of the SFIO had said.