perspectives

The Quarry

What the trial of Manmohan Singh must address

By KRISHN KAUSHIK | 1 April 2015

THE TRIAL OF ANDIMUTHU RAJA came to an impasse on 27 January 2013 when his lawyer, Sushil Kumar, was questioning Goolam Vahanvati, then the attorney general of India. Raja, the former telecom minister, had claimed that the policy decisions that led to his indictment in what is now called the 2G spectrum scam were not taken independently. Vahanvati was aware of the changed policy, he said; and so was Pranab Mukherjee, the head of the Empowered Group of Ministers responsible for spectrum allocation. Since Vahanvati denied that any such discussions had taken place between himself, Mukherjee and Raja, it was impossible to establish the truth of the matter. Only three people, Kumar said with a dramatic flourish, were aware of the details. “One is him,” he said, pointing to Vahanvati. “One is him,” at Raja. “And the third is at a position where we cannot reach”—implying in Rashtrapati Bhavan.

Mukherjee, by virtue of his presidential position, remains immune to prosecution. The former prime minister, Manmohan Singh, is not. Even as Raja’s case was being heard, it emerged that the 2G scam was not the most expensive of the UPA government’s misadventures. A report by the Comptroller and Auditor General of India calculated that while irregularities in spectrum allocation had incurred the government a loss of R1.76 lakh crore (R1.76 trillion), its ineffective and possibly corrupt distribution of coal blocks had cost the exchequer R1.85 lakh crore. The Empowered Group of Ministers for coal was also headed by Mukherjee. Though this EGoM did not allocate blocks, decisions taken by it, as mentioned in the CAG’s report, allowed windfall profits for private players. Yet the lion’s share of responsibility for the decisions on the coal blocks, now under investigation in a special Central Bureau of Investigation court, falls on Singh, who, in addition to leading the cabinet as prime minister, was also, for much of his tenure, head of the coal ministry, which was in charge of the screening committee for coal allocation.

On 11 March this year, the CBI court summoned Singh as accused number 6 in one of several cases pertaining to the alienation of coal blocks. Singh’s defenders decried the summons as a witch-hunt; prominent leaders of the Congress, rallied by the party president, Sonia Gandhi, led a march to Singh’s residence in a show of support and solidarity when the news broke. On the front pages of the next day’s newspapers, the sight of senior Congressmen in that procession—including the former cabinet ministers AK Antony, P Chidambaram, and Anand Sharma—reminded many people that fresh inquiries might yet cast doubt on the conduct of others in power during the UPA regime. Others pointed out that the summons came at a suspiciously convenient moment for the ruling National Democratic Alliance, as it attempted to overcome serious hurdles in parliament during the budget session.

Since he has been called to account, Singh must use the opportunity to clarify what happened during a process that remains, at best, an opaque one. This particular case concerns the three Talabira coal blocks in western Odisha. In 1994, the aluminium producer Hindalco Industries, owned by Kumar Mangalam Birla, was allotted the Talabira I block, which it would mine to fuel a proposed aluminium plant. As early as 1996, it also wanted access to Talabira II. Talabira III, the largest of the blocks, was controlled by Mahanadi Coalfields Limited, a subsidiary of the government-owned Coal India Limited, and had never been up for allocation to private companies.

Talabira II and III were contiguous blocks, and it was more efficient to mine them together. So, by early 2005, the screening committee and the coal ministry decided to grant the rights to both to Mahanadi Coalfields, which was to collaborate with another public sector company, Neyveli Lignite Corporation, even though the Odisha government was strongly in favour of giving Hindalco a slice of Talabira II.

In May and June 2005, Kumar Mangalam Birla addressed two letters to the Prime Minister’s Office, which forwarded them to the coal ministry, asking for a report on the allocation. The ministry responded to the PMO’s request in August, justifying its decision to give Mahanadi the block. That month, the chief minister of Odisha, Naveen Patnaik, also wrote to the PMO in support of Hindalco. The PMO then asked the coal ministry to reconsider the allocation, and sent it the Odisha government’s letter. In September, the coal ministry reversed its earlier stance and submitted a new proposal for allotment. In this new dispensation, Hindalco got a 15-percent share not only in Talabira II, but also Talabira III—giving it access to more coal than it required for its proposed plant. The prime minister approved the new plan on 1 October that year.

 

The facts demonstrate the arbitrariness and lack of transparency in the allotment process, although they do not, in themselves, constitute evidence of corruption—bad policy must not be conflated with graft. Singh took full responsibility for all the ministry’s decisions in 2012, when questions were raised against the Comptroller and Auditor General’s report in parliament. “I wish to say that any allegations of impropriety are without basis and unsupported by the facts,” he said. But, in 2014, the Supreme Court decided that many decisions taken by the screening committee were “illegal” and “arbitrary,” and cancelled all allocations made since 1993.

Screening committees for the alienation of coal blocks have existed since 1993, when India felt the need to cultivate private companies’ interest in mining. Under this system, an inter-ministerial screening committee chaired by the coal secretary decided on the allocation of captive blocks to private companies, which had exclusive rights to mine coal to feed industries that depend on the fuel, including power, steel and cement. This was in no way Singh’s or the UPA’s innovation, but its faults were readily apparent, and Singh can be accused of failing to stop or improve the process when he had the opportunity. Everything we know about the coal allocation scam so far demonstrates the problems with the modus operandi. The CBI found that there were instances when minutes of the screening committee’s meetings went un-recorded; files related to corporate bidders and the allotment process have gone missing.

PC Parakh, who was coal secretary between March 2004 and December 2005, and has also been summoned by the court, has claimed in interviews that he tried to convince Singh to adopt the process of auctioning coal blocks, a more transparent way of doing business. Moves to change the process commenced in late 2004, soon after Singh assumed power, but thanks to red tape and political expediency, no blocks were ever auctioned under the UPA government. In September 2012, the Deccan Herald quoted Parakh saying, “The prime minister could have put his weight behind to see that auction route was followed. After I took over, I put the screening committee on hold for a while to bring about a transparent system. The prime minister, instead of waiting, decided to go ahead with the old system.”

Singh was coal minister through much of the UPA’s first term between 2004 and 2009. All the chargesheets the CBI has filed in its investigation pertain more or less to this period—and both the coal ministry as well as the PMO interfered in the CBI’s dealings. On 6 March 2013, Ashwani Kumar, then the law minister, called two meetings in order to vet the CBI’s draft status reports in Preliminary Enquiries 2 and 4, both of which were later submitted to the Supreme Court. The meetings included Vahanvati; an additional solicitor general, Harin Raval, who was appearing for the CBI for all “Coal-gate” hearings; the CBI director, Ranjit Sinha; and Sinha’s junior OP Galhotra. There were also two others present: AK Bhalla, a joint secretary from the coal ministry; and Shatrughna Singh, a joint secretary in the PMO.

In an affidavit Sinha filed in the Supreme Court weeks after those meetings, he said that everyone present had suggested changes to the reports, and that Kumar, Singh and Bhalla had suggested a few “significant” amendments. The Supreme Court observed that these amendments had “changed the heart” of the reports. In a later order, it noted that “there was no justifiable reason for the two Joint Secretaries to peruse the draft status reports and recommend changes,” nor was there “any justification for the CBI to allow these officers access to the draft status reports and allow the changes in the draft status reports as suggested by them.”

It’s worth pointing out that Manmohan Singh led both Bhalla and Shatrughna Singh’s ministries during the period under investigation in Preliminary Enquiries 2 and 4. It remains unclear who asked the two officers to the meetings, or on whose behalf Ashwani Kumar had called the meetings in the first place.

Throughout his tenure, Singh was plagued by allegations that he privately answered to Sonia Gandhi. The CBI’s investigations have not linked Singh’s actions to Gandhi in any way. The only news story to allege such a connection in the mainstream media has been retracted. In September 2012, the Mumbai Mirror published a story claiming that Singh had recently met Gandhi to tell her that he had cleared some coal block allocations on the recommendation of her political henchman, Ahmed Patel. The PMO issued a rebuttal the day after the story appeared, calling it “scurrilous, irresponsible and mischievous,” and the piece was taken off the newspaper’s website.

Last year, when I was speaking to the former secretary of a cabinet ministry about a completely different issue, he told me a story about how Gandhi supposedly communicated with the PMO through Pulok Chatterji, Singh’s principal secretary between 2011 and 2014 and a long-time associate of the Gandhi family. Chatterji, the former secretary said, took files with Gandhi’s comments and recommendations added on Post-It notes. Once the decision was finalised, the notes were removed, and sent down the bureaucratic chain. The former secretary claimed he learned of this mode of communication when he saw one such file before the Post-Its had been removed.

The wider implications of Singh’s summons extend beyond his government, and even his party, however. A PMO note released in 2013 said that the state of Odisha’s “strong recommendation” was considered in the Talabira case. Dealings with other states followed a similar pattern. A top bureaucrat from one of the ministries involved in the decision-making told me that the Empowered Group of Ministers had a similar role to play in the case of coal blocks allotted to the Reliance Anil Dhirubhai Ambani Group at Sasan in Madhya Pradesh, although the blocks, meant to fuel the Ultra Mega Power Plant, should have been allotted through competitive bidding, as per the power ministry’s guidelines. Madhya Pradesh authorities were favourable to the company’s demand, but the central coal and power ministries had issues with them. The bureaucrat said that Reliance had already “started moving in Madhya Pradesh”—ruled by the Bharatiya Janata Party—by the time the Empowered Group of Ministers was asked to decide on the use of esxcess coal from the blocks, and that ultimately, as the head of the group, Pranab Mukherjee had “bulldozed” the ministries’ resistance.

As far as the current government is concerned, both Singh himself, and a company belonging to the Birla family—long associated with the Nehru-Gandhis and the Congress—may present easy targets. Yet an administration that came to power on the back of widespread dissatisfaction with the UPA’s wrongdoings must bear in mind that the Supreme Court did not restrict its condemnation of coal allocation practices to the UPA regime alone. Many of the cancelled decisions date back to the rule of a BJP-led alliance under Atal Bihari Vajpayee. In keeping with federal requirements, many of the Singh government’s decisions were taken in consultation with state authorities led by BJP chief ministers. Many of those decisions benefitted companies whose heads have publicly backed Modi—Sasan is a case in point. If these are pushed under the carpet, the investigating agencies, as well as the current administration, will have to face the suspicion that they are protecting the BJP’s regional leaders, and private companies close to them.

Singh’s appearance in court is undoubtedly in the interests of fairness, but those very interests require that players from across the political spectrum—including those arguably more influential than Singh himself—are investigated. It is a disgrace that a former prime minister is accused in one of the largest corruption cases in the country’s history, but the only way to follow up on this drastic occurrence is to ensure that the trial is unquestionably fair. More than people of unimpeachable integrity, democracies are distinguished by the strength of the rule of law, and institutions that function even when their leaders are not infallible. Singh has a long reputation for personal integrity. The trial will no doubt put him to the test on that score; it remains to be seen who else will be called to account.

Correction: An earlier version of this article incorrectly stated that the Empowered Group of Ministers for coal oversaw the allocation of coal blocks. The Caravan regrets the error.

THE TRIAL OF ANDIMUTHU RAJA came to an impasse on 27 January 2013 when his lawyer, Sushil Kumar, was questioning Goolam Vahanvati, then the attorney general of India. Raja, the former telecom minister, had claimed that the policy decisions that led to his indictment in what is now called the 2G spectrum scam were not taken independently. Vahanvati was aware of the changed policy, he said; and so was Pranab Mukherjee, the head of the Empowered Group of Ministers responsible for spectrum allocation. Since Vahanvati denied that any such discussions had taken place between himself, Mukherjee and Raja, it was impossible to establish the truth of the matter. Only three people, Kumar said with a dramatic flourish, were aware of the details. “One is him,” he said, pointing to Vahanvati. “One is him,” at Raja. “And the third is at a position where we cannot reach”—implying in Rashtrapati Bhavan.

Mukherjee, by virtue of his presidential position, remains immune to prosecution. The former prime minister, Manmohan Singh, is not. Even as Raja’s case was being heard, it emerged that the 2G scam was not the most expensive of the UPA government’s misadventures. A report by the Comptroller and Auditor General of India calculated that while irregularities in spectrum allocation had incurred the government a loss of R1.76 lakh crore (R1.76 trillion), its ineffective and possibly corrupt distribution of coal blocks had cost the exchequer R1.85 lakh crore. The Empowered Group of Ministers for coal was also headed by Mukherjee. Though this EGoM did not allocate blocks, decisions taken by it, as mentioned in the CAG’s report, allowed windfall profits for private players. Yet the lion’s share of responsibility for the decisions on the coal blocks, now under investigation in a special Central Bureau of Investigation court, falls on Singh, who, in addition to leading the cabinet as prime minister, was also, for much of his tenure, head of the coal ministry, which was in charge of the screening committee for coal allocation.

On 11 March this year, the CBI court summoned Singh as accused number 6 in one of several cases pertaining to the alienation of coal blocks. Singh’s defenders decried the summons as a witch-hunt; prominent leaders of the Congress, rallied by the party president, Sonia Gandhi, led a march to Singh’s residence in a show of support and solidarity when the news broke. On the front pages of the next day’s newspapers, the sight of senior Congressmen in that procession—including the former cabinet ministers AK Antony, P Chidambaram, and Anand Sharma—reminded many people that fresh inquiries might yet cast doubt on the conduct of others in power during the UPA regime. Others pointed out that the summons came at a suspiciously convenient moment for the ruling National Democratic Alliance, as it attempted to overcome serious hurdles in parliament during the budget session.

Since he has been called to account, Singh must use the opportunity to clarify what happened during a process that remains, at best, an opaque one. This particular case concerns the three Talabira coal blocks in western Odisha. In 1994, the aluminium producer Hindalco Industries, owned by Kumar Mangalam Birla, was allotted the Talabira I block, which it would mine to fuel a proposed aluminium plant. As early as 1996, it also wanted access to Talabira II. Talabira III, the largest of the blocks, was controlled by Mahanadi Coalfields Limited, a subsidiary of the government-owned Coal India Limited, and had never been up for allocation to private companies.

Talabira II and III were contiguous blocks, and it was more efficient to mine them together. So, by early 2005, the screening committee and the coal ministry decided to grant the rights to both to Mahanadi Coalfields, which was to collaborate with another public sector company, Neyveli Lignite Corporation, even though the Odisha government was strongly in favour of giving Hindalco a slice of Talabira II.

In May and June 2005, Kumar Mangalam Birla addressed two letters to the Prime Minister’s Office, which forwarded them to the coal ministry, asking for a report on the allocation. The ministry responded to the PMO’s request in August, justifying its decision to give Mahanadi the block. That month, the chief minister of Odisha, Naveen Patnaik, also wrote to the PMO in support of Hindalco. The PMO then asked the coal ministry to reconsider the allocation, and sent it the Odisha government’s letter. In September, the coal ministry reversed its earlier stance and submitted a new proposal for allotment. In this new dispensation, Hindalco got a 15-percent share not only in Talabira II, but also Talabira III—giving it access to more coal than it required for its proposed plant. The prime minister approved the new plan on 1 October that year.

 

The facts demonstrate the arbitrariness and lack of transparency in the allotment process, although they do not, in themselves, constitute evidence of corruption—bad policy must not be conflated with graft. Singh took full responsibility for all the ministry’s decisions in 2012, when questions were raised against the Comptroller and Auditor General’s report in parliament. “I wish to say that any allegations of impropriety are without basis and unsupported by the facts,” he said. But, in 2014, the Supreme Court decided that many decisions taken by the screening committee were “illegal” and “arbitrary,” and cancelled all allocations made since 1993.

Screening committees for the alienation of coal blocks have existed since 1993, when India felt the need to cultivate private companies’ interest in mining. Under this system, an inter-ministerial screening committee chaired by the coal secretary decided on the allocation of captive blocks to private companies, which had exclusive rights to mine coal to feed industries that depend on the fuel, including power, steel and cement. This was in no way Singh’s or the UPA’s innovation, but its faults were readily apparent, and Singh can be accused of failing to stop or improve the process when he had the opportunity. Everything we know about the coal allocation scam so far demonstrates the problems with the modus operandi. The CBI found that there were instances when minutes of the screening committee’s meetings went un-recorded; files related to corporate bidders and the allotment process have gone missing.

PC Parakh, who was coal secretary between March 2004 and December 2005, and has also been summoned by the court, has claimed in interviews that he tried to convince Singh to adopt the process of auctioning coal blocks, a more transparent way of doing business. Moves to change the process commenced in late 2004, soon after Singh assumed power, but thanks to red tape and political expediency, no blocks were ever auctioned under the UPA government. In September 2012, the Deccan Herald quoted Parakh saying, “The prime minister could have put his weight behind to see that auction route was followed. After I took over, I put the screening committee on hold for a while to bring about a transparent system. The prime minister, instead of waiting, decided to go ahead with the old system.”

Singh was coal minister through much of the UPA’s first term between 2004 and 2009. All the chargesheets the CBI has filed in its investigation pertain more or less to this period—and both the coal ministry as well as the PMO interfered in the CBI’s dealings. On 6 March 2013, Ashwani Kumar, then the law minister, called two meetings in order to vet the CBI’s draft status reports in Preliminary Enquiries 2 and 4, both of which were later submitted to the Supreme Court. The meetings included Vahanvati; an additional solicitor general, Harin Raval, who was appearing for the CBI for all “Coal-gate” hearings; the CBI director, Ranjit Sinha; and Sinha’s junior OP Galhotra. There were also two others present: AK Bhalla, a joint secretary from the coal ministry; and Shatrughna Singh, a joint secretary in the PMO.

In an affidavit Sinha filed in the Supreme Court weeks after those meetings, he said that everyone present had suggested changes to the reports, and that Kumar, Singh and Bhalla had suggested a few “significant” amendments. The Supreme Court observed that these amendments had “changed the heart” of the reports. In a later order, it noted that “there was no justifiable reason for the two Joint Secretaries to peruse the draft status reports and recommend changes,” nor was there “any justification for the CBI to allow these officers access to the draft status reports and allow the changes in the draft status reports as suggested by them.”

It’s worth pointing out that Manmohan Singh led both Bhalla and Shatrughna Singh’s ministries during the period under investigation in Preliminary Enquiries 2 and 4. It remains unclear who asked the two officers to the meetings, or on whose behalf Ashwani Kumar had called the meetings in the first place.

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Krishn Kaushik is a staff writer at The Caravan.

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