Coal firms minted money, sold equity without mining
The coal-block allocation scandal is increasingly looking like a sequel to the 2G spectrum scam as far as the behaviour of the companies involved is concerned. Gaurav Choudhury and Rajesh Ahuja report. Hauled over the coals | Govt hits a coal-blockdelhi Updated: Sep 03, 2012 08:06 IST
The coal-block allocation scandal is increasingly looking like a sequel to the 2G spectrum scam as far as the behaviour of the companies involved is concerned.
As was with the telecom scam, many of the “coalgate” companies that cornered the government-allocated resource — like the spectrum — have used it to raise money from the market at hefty valuations.
"We know some of the promoters have made a killing by selling entire or partial stake after getting captive blocks. But our problem is there was no lock-in period for promoters for offloading stake... So we can’t take action against them," said a CBI official on condition of anonymity.
Promoters of more than 10 companies are believed to have sold off stakes on the back of allocations without even starting work. In the 2G scam, spectrum cornered by the some companies gave their promoters capital gains in the equity market.
The government is now taking steps to scrutinise the shareholding and equity structures of companies that were allotted coal blocks. Though these firms have not begun work on the projects — making the profits “presumptive” or notional — the fact remains that the mining rights won several years ago have helped promoters strike rich.
“There was bar on sub-letting of blocks allocated to the companies but they were free to offload equity,” a government source, who did not wish to be identified, told HT.
“In many cases, management of companies changed hands as no lock-in period was prescribed,” said the source.
The Comptroller and Auditor General has estimated that arbitrary allocation of 57 coal fields to 25 private companies may have robbed the exchequer of R1.86 lakh crore in potential revenue.
The allocations have pitted the government against the Opposition and have been holding up Parliament for more than two weeks.
Sources confirmed that the parliamentary standing committee on coal and steel raised the issue in its last meeting in July and asked for invoking of the bank guarantees the promoters of such companies furnished.
“The delay in initiating action and the issue of share sale by companies, which had received coal blocks, came in for severe criticism during the July 9 meeting,” a source said.
If the companies made false representation for getting blocks then the proceeds from sell-off would be illegitimate and invite criminal action, said the CBI official.
Members of an inter-ministerial group (IMG), which will meet Monday to recommend action against companies for delay in mining, have even complained that the coal ministry has not been able to furnish all the relevant papers, citing work related to the CBI inquiry.
The agency had sought ownership and shareholding details of companies, sources said.
The IMG is likely to recommend deduction of bank guarantees from about a dozen companies for delays, most of which have also seen a major change in their shareholding structures.