Coal block allocation scam: K M Birla named in CBI's report

Alleged to have met the then coal secretary to influence him for allocation of a coal block

The 14th first information report (FIR) in the alleged coal block allocation scam has named industrialist Kumar Mangalam Birla as an accused, along with the government’s former coal secretary P C Parekh, for alleged criminal conspiracy and abuse of official position. According to a senior CBI official, the agency has found Birla had met Parekh to push for the allocation of the Talabira II coal block in Odisha’s Jharsuguda district in the second half of 2005.

CBI has alleged Birla’s company was accommodated in the said coal block, though the provisions allowed allocation only to public-sector companies. “The screening committee’s recommendations were overturned, abusing the official position, to give favours to Hindalco,” the CBI official said.

Though Birla was the non-executive chairman of Hindalco, he has been named in the FIR. “Shocked” Birla group officials said it was “unfair” and “inappropriate” to bring the group chairman into the FIR, as he was not looking after day-to-day operations of Hindalco. (7 THINGS YOU WANTED TO KNOW)

The Talabira II block was initially allocated to Neyveli Lignite Corp, a public sector company under the coal ministry, in line with the recommendation of the 25th screening committee. Later, it has been alleged, Hindalco was also allowed to mine in the same block “at the expense of Neyveli”.

This is the first case to be registered under the preliminary enquiry of coal block allocations to PSUs from 1993 to 2011. Among prominent names to surface in the previous 13 cases are those of Lok Sabha MP and JSPL Chairman Naveen Jindal, senior Congress member Vijay Darda and Jharkhand Ispat Mining’s RS Rungta, among others.

CBI claimed to have found incriminating evidence in the searches conducted at five locations, including Hindalco’s corporate offices in Mumbai, Delhi and Secunderabad, besides the residence of senior company official S K Tamotia in Bhubaneswar.

CBI is still investigating how and why the decision of the 25th screening committee was overturned.

“As a chairman, Birla meets almost all top government officials, both in India and abroad, including the prime minister, but that does not mean he is influencing them for business interests,” a company official said on CBI’s stand that the industrialist was named as he met the then coal secretary to influence him and get the coal block allocated to Hindalco. The group’s officials denied Birla took any decision that was against the national interest or was in conflict with the law of the land.

The 46-year-old Birla is a leading industrialist — building his empire through a series of mergers & acquisitions.

There were mixed reactions to the development from the shares of Aditya Birla Group firms Hindalco and AB Nuvo on BSE on Tuesday. The Hindalco scrip tanked 4.97 per cent to Rs 105.10 in intra-day trade but recouped the losses to close 1.45 per cent higher than its previous close, at Rs 112.20. Similarly, Aditya Birla Chemicals was up 1.93 per cent. Shares of AB Nuvo ended 2.02 per cent lower, while Idea Cellular was down 0.08 per cent. Among others, shares of Grasim fell 0.33 per cent, and Aditya Birla Money slipped 4.79 per cent.

In a filing to BSE, Hindalco said: “Apparently, this (the company and Birla being named in the FIR) seems to be part of a larger case entailing coal allocation to companies; we are being investigated also. We wish to state unambiguously that we have followed every process required for allocation of coal completely, as stipulated by the government policy.”

In a statement, a spokesperson for Birla said the case related to a larger case entailing coal allocation to companies, and, being one of the companies, Hindalco was also being investigated. “We wish to state unambiguously that we have followed every process required for allocation of coal completely, as stipulated by the government policy,” said the spokesperson.

Apart from Hindalco, an FIR has been filed against government-owned National Aluminium Company Ltd (Nalco), too. But Nalco said, through a notification to BSE, that it had no information about any FIR filed against the company on allocation of the Utkal-E coal block in Odisha. This block was allocated in August 2004 and Nalco has been looking to get all clearances in place for it.