CBI to drop coal scam case against Kumar Mangalam Birla

Investigations against Jindal Steel and Power in a different coal block allocation to continue

The Central Bureau of Investigation (CBI) said on Monday it would close a coal scam case against billionaire Kumar Mangalam Birla and a former top bureaucrat that surfaced in 2012 after a government auditor's report.

The CBI will file a closure report on the case against Birla and former coal secretary P C Parakh very soon, CBI spokeswoman Kanchan Prasad told Reuters.

"Obviously if a closure report is being filed there's no criminality (on the part of Birla and Parakh)," she said.

The national auditor had alleged that the government's under-priced sale of coal blocks may have cost the exchequer revenues of $33 billion, although industry watchers and the previous government had cast doubts on the figure. 

The CBI filed the case against Birla and Parakh late last year in relation to a block allocated in 2005 to Hindalco Industries , part of the $40 billion Aditya Birla Group. Kumar Mangalam Birla is the chairman of the group.

The case had sparked widespread condemnation from industry leaders and politicians alike given Birla's stature as a leading Indian entrepreneur.

Hindalco had denied any wrongdoing and even the then Prime Minister Manmohan Singh, who was in charge of the coal ministry when the allocation took place, defended the decision to award the block to Hindalco.

Hindalco shares were down 1.4% in late morning trade in a wider market that was up 0.67%.

Prasad, however, said investigations against Jindal Steel and Power Ltd in a different coal block allocation will continue. Jindal, controlled by former Congress party lawmaker Naveen Jindal, has said it was cooperating with the CBI.