In a major embarrassment for the UPA, the CBI has accused former union minister of state for coal Dasari Narayan Rao of accepting Rs. 2.25-crore bribe for allocating a coal block to the companies owned by Congress MP and industrialist Naveen Jindal.
The agency sleuths searched 15 locations, including residence and offices of Jindal, who represents Kurukshetra in the Lok Sabha, in Delhi and those of Rao in Hyderabad.
“Jindal will soon be called for questioning as he was allegedly calling the shots at the time of allocation,” said a CBI source. Prime Minister Manmohan Singh held the coal portfolio and Rao was the junior minister when Jindal's firm was awarded the block in late 2007.
Jindal, who fought a court battle that resulted in citizens being allowed to hoist the Tricolour through the year rather than just on national holidays, has also been accused of cheating and misrepresenting facts.
Both Rao and he have been named as accused in the CBI FIR along with unnamed members of the screening committee that allocated the Amarkonda Murgadangal coal block in Birbhum of Jharkhand to Jindal.
During the searches, agency officers also asked some questions from Rao, who was the minister of state for coal between May 23, 2004 and April 6, 2008. He has been questioned earlier as well in the coal scam that has singed the government, with the Supreme Court keeping a close watch on the investigation.
Jindal Steel and Power Limited and Gagan Sponge Iron Limited, allegedly also a Jindal firm, bagged the block by misrepresenting facts on three counts — land, water supply and previous allocations, said sources.
Both the firms have also been named in the FIR.
In an application submitted in January 2007, Jindal Steel claimed that it had only three coal blocks but actually owned six, said investigators. It was done to boost the firm's eligibility as the government was not in favour of allocating a large number blocks to one company.
Once the allocation was done, Jindal-owned New Delhi Exim purchased shares in Rao's Sowbhagya Media at an exorbitant price of R100 per share as against the listed price of R28, said a CBI source.
“Total investment stood at Rs 2.25 crore which was basically a bribe vehicle.
The account books of New Delhi Exim showed the money as loan from Jindal Realty, which in turn had received the money as loan from Gagan Sponge to show it to be a genuine investment,” said the source.Rao, a former Congress Rajya Sabha MP, is under scanner for more such deals, said sources.
“JSPL, as a law abiding company, is governed by a strong ethical code of conduct. This is an ongoing CBI investigation... JSPL is committed to fully cooperating with the CBI,” said Manu Kapoor, head of external affairs at Jindal Steel.
The impact of the CBI raids was felt in the stock market. Shares of Jindal Steel and Power crashed 15.18% on the Bombay Stock Exchange. The scrip lost Rs 40 during the day to closed at Rs 226.35. Jindal and his co-promoters, who own about 59% of the company, lost about Rs 2,200 crore during the day.