Incidentally, the preliminary enquiry has been converted into an FIR as Aditya Birla Group moved to acquire India Cements to compete with Adani Group’s ACC.
New Delhi: The CBI has registered a corruption case against Hindalco Industries Ltd, a subsidiary of the Aditya Birla Group.
The CBI has accused Hindalco Industries Ltd of violating the Environmental Clearance granted for coal mining in Odisha and alleges that Hindalco mined 3.045 million tonnes of excess coal than the permitted capacity.
CBI has also charged Chandini, then Director in Ministry of Environment and Forest for allegedly misusing her office and providing undue benefits to Hindalco by granting further Environmental Clearance for doubling coal mining capacity in Talabira mine in 2011 in violation of prohibition imposed by the Ministry in critically polluted areas.
In its FIR, the CBI has stated that the offence began in the year 2000 which includes the tenure of Vajpayee led NDA Govt in Centre.
Back in 2016, the CBI had registered a Preliminary Enquiry against officials of Aditya Birla Management Corporation Ltd to probe allegations of “payments of massive bribe amounts by M/s ABMCPL to unknown officials of Ministry of Environment and Forest during the period 2011 to 2013 for grant of Environmental Clearance (hereinafter known as EC) to its projects.”
After eight years of Preliminary Enquiry, CBI has converted the same into a full-fledged investigation by registering a FIR against Hindalco under Prevention of Corruption Act.
Incidentally, the preliminary enquiry has been converted into an FIR as Aditya Birla Group moved to acquire India Cements to compete with Adani Group’s ACC.
“Hindalco was found to have violated earlier ECs granted in 2001 & 2009, producing excess quantity of coal over and above the capacity for which ECs were granted by MoEF”, reveals CBI’s preliminary enquiry report.
Sources say, CBI initiated the preliminary enquiry in 2016 based on ‘diary entries’ of alleged payment of bribes recovered from the premises of Hindalco during searches in an alleged coal scam case.
Singrauli, a district in Madhya Pradesh, has seen widespread displacement of tribals whose rights are compromised in favour of mining.
Singrauli, a district in Madhya Pradesh, has seen widespread displacement of tribals whose rights are compromised in favour of mining.
Jhingurdah Coal mine, oldest coal mine in India’s power capital Singrauli. Credit: Tanmoy Bhaduri
Thousands of people in Singrauli have suffered recurring displacement due to industrial and infrastructural development. But for the first time, an entire town will be brought down for mining. The Coal Bearing Areas (Acquisition and Development) Amendment Act 1957 is threatening to wipe Morwa, a town in Madhya Pradesh, off the map. The Act has become the focal point of conversation in the region – be it hoteliers, residents or tribals, living on the outskirts of the town. Northern Coalfields Limited (NCL), a subsidiary of Coal India Limited, is set to acquire the entire town and ten adjoining villages under the Act, turning the area into a coal mine. It is situated at the heart of Singrauli, which is home to abundant reserves of power grade coal and is known as India’s energy capital. The town developed in the 1950s when rapid industrial development in the region displaced people by the thousands. They flocked to the eight villages in Morwa, and gradually the area mushroomed into a bustling township with 11 municipal wards and a population of 50,000.
Forest area inside NCL coal mine. Credit: Tanmoy Bhaduri
In June 2016, local media first reported that ward number 10 of Morwa and eight villages dominated by the Gond and Baiga tribe would be acquired to expand the coal mines. The move would affect areas on the outskirts of the town and displace 400 families. According to Down To Earth magazine, “the ministry of coal issued two extraordinary gazette notifications under Section 4 of the Act for the acquisition of 19.25 square kilometres of area in two phases. This is an emergency provision that allows immediate takeover of land and will cover the entire town. The residents protested the takeover, claiming that the acquisition notice violated many legal provisions. As the Act allows the residents to file their objections within 90 days of the notice, they sent a letter to NCLin June. But NCL refused to even talk to them.”
Inside the coal mine. Credit: Tanmoy Bhaduri
Sadly, the regions that are rich in natural and mineral resources often have a poor record in holding up human rights – suffering long histories of exploitation, deprivation and development-induced displacement of local communities so others can access those minerals. Singrauli is no exception.
Fly ash, the by-product of coal combustion directly mixes with air. Credit: Tanmoy Bhaduri
In 1954, the construction for the Rihand Dam began, displacing 200,000 people from 146 villages in Uttar Pradesh and Madhya Pradesh. Many of them migrated to Morwa.
In 1973, the Special Authority Development Area, a municipal corporate body, was established in Singrauli to regulate the acquisition of land for future projects. It facilitated legitimisation of projects and pushed new development projects.
A village in the area. Credit: Tanmoy Bhaduri
In 1977, the World Bank loaned US $150 million to the National Thermal Power Corporation for the construction of the first coal-fired power plant in the region. Around 600 families, already displaced by the Rihand Dam, were forced to move to Morwa.
In 1985, Northern Coalfields’ Dudhichua coal mine displaced about 378 people, mostly tribals.
A resident. Credit: Tanmoy Bhaduri
From 2006 five super thermal power projects were undertaken by Dainik Bhaskar, Essar, Hindalco, Jaypee and Reliance, and were set up as private public partnerships. Around 4,047 hectares of land was acquired for mines and power plants, displacing more than 3,000 families in Singrauli. Some of these projects figure in the infamous coal scam, later cancelled by the Supreme Court in September 2014.
Facing displacement once again, Vinod Singh, a local hotel owner said, “We never support displacement – already we have a society here. Compensation rates under the Coal Bearing Areas Act are five times lower than market rate.”
Vinod Singh. Credit: Tanmoy Bhaduri
According to the Blacksmith Institute’s findings, “A widely cited but unpublished study by Electricité de France reveals that Singrauli’s thermal power plants release about 720 kilograms of mercury per year”. The UN cited an Indian Central Pollution Control board estimate that “17% of power plant mercury emissions are from the Singrauli region.” Fly ash, the by-product of coal combustion, is also a significant problem. The coal-burning power plants release about six million tons of fly ash a year, making land unfit for cultivation. In parts of Singrauli, the fly ash lies in piles five feet thick.
“Section 4 under Coal Bearing Areas (Acquisition and Development) Amendment Act, 1957 imposed in 11 wards and 8 villages of Singrauli Nagar Nigam on June, 2016. If this will be executed around 50,000 people will be homeless. We will face social and cultural loss. We want to stop this kind of land acquisition.” said activist Gauri Shankar Dubey.
Gauri Shankar Dubey. Credit: Tanmoy Bhaduri
Morwa today has five schools, three hospitals, a bus stand, a railway station and is a part of national highway 75E which runs through the town. Most people are employed in servicing nearby coal mines as workers or as transporters of mined coal and hotel owners cater to visiting NCL officials. But the same mines that have sustained Morwa until now will expand soon to swallow it completely.
“NCL gave me a land near the national highway but the highway authority did not allow me to build a home there. Again, I started live in NCL land though I don’t have any patta (documents). Nagar nigam asked for bribes – I gave them three thousand. Where will we go?” says Urmila Baiga, a member of Baiga community.
Urmila Baiga. Credit: Tanmoy Bhaduri
“We will not give any land for mining, we have been displaced since 1965 when the Jhingrudah mine opened. Then we got Rs 200-500 per acre. We made this land fertile. What will we eat if this land is acquired?” says an old tribal leader Roshan Singh Tekab from Jhingrudah village which is populated by the Gonds.
Prominent lawyer Prashant Bhushan discusses the recent Sahara-Birla diaries, over-invoicing of coal imports by Reliance and Adani groups, and the Essar tapes.
Prominent lawyer Prashant Bhushan discusses the recent Sahara-Birla diaries, over-invoicing of coal imports by Reliance and Adani groups, and the Essar tapes.
You recently brought to public notice the Sahara diaries and the Birla papers, which the income tax department also has. Could you tell us about what these documents actually say?
In 2013, there was a CBI raid on the Aditya Birla Group of companies, in particular Hindalco, in connection with the coalgate scam. In that raid, apart from recovering Rs 25 crores in cash, the CBI also recovered some information stored in the computer of the CEO of the Birla group – Amitabh. Several documents were recovered – some of them showed bribes being paid to some Environment Project J, which is obviously to the ministry or to the minister of environment. We know that around the same time the Birla group of companies was trying to secure environmental clearances from the ministry of environment for a large number of their projects. So those clearly represented bribes paid for getting the environmental clearances. There was another set of documents which was recovered from the computer of Shubhendu Amitabh, which said, “Gujarat CM – Rs 25 crores. 12 paid. 13?”
Unfortunately, though these documents showed payment of bribes and therefore, offences under Prevention of Corruption Act, the CBI did not register any FIR on this matter but just passed the papers on to the income tax (IT) department.
Income tax department did a somewhat detailed investigation into the matter. They questioned Amitabh many times in which he admitted that he had written, “Gujarat CM – Rs 25 crores. 12 paid. 13?” But he said that “Gujarat CM” meant Gujarat Alkalis and Chemicals. When asked what the C and M stood for he was unable to answer and the IT department concluded that he was lying.
They also found that there was a large amount of cash which was being received through Hawala by the Birla group and was apparently being paid to various people. But despite this the IT department did not refer the matter back to the CBI for investigation of these ostensible offences under the Prevention of Corruption Act and the matter was sought to be buried at that level. After that we understand that the Birla group has approached the IT settlement commission for settling the matter and the hearings have been concluded; the matter is likely to be settled after which there is this apprehension that the papers seized in the raids will be returned back to the Birla group.
The Sahara raid took place on November 22, 2014. In this raid Rs 137 crores of cash was seized from their offices in Noida, from the corporate office of the chairman, and a large number of documents, some loose sheets, computer data from his personal staff were seized, which showed details of proposed as well as actual payments made to various senior political figures. One of the documents which was seized – a printout of a detailed spreadsheet – in which the first three columns represent the cash the Sahara group received on different dates from different sources and the total comes to Rs 115 crores. Thereafter, this document also represents cash payments to different people on different dates and the places where the payment has been made, and the persons who have taken the payment are also mentioned. It is signed by the IT officer, two witnesses and one of the Sahara officials. Several such documents were recovered in this raid. There was another one which was partly overlapping with minute differences. For example, in the previous one the payments which were referred to as, “cash given at Ahmedabad, Modiji”, in other documents they are referred to as, “cash given to CM Gujarat”. There are Rs 40 crores given at Ahmedabad to Modiji, Rs 10 crores given to CM of Madhya Pradesh, Rs 4 crores to CM of Chhattisgarh, Rs 1 crore to CM of Delhi which at that time was Ms Sheila Dikshit. These are all payments made between 2013 and March 2014.
Despite recovery of such incriminating documents and in such detail which showed pay-offs made to various senior political figures, the IT department did not refer this matter to the CBI for investigation under the Prevention of Corruption Act. They apparently prepared some appraisal report which according to my understanding does not deal with these papers and the pay-offs, and these documents were buried. The person who was responsible for burying the documents of both Birla and Sahara was K. V. Chowdary, who was heading the IT investigations at the time and thereafter was appointed, apparently as a reward, as the chief of central vigilance commissioner of the Central Vigilance Commission (CVC). It was the first time a revenue officer was appointed although there were a number of complaints against him; his name appeared several times in the entry register of the infamous former CBI director, Ranjit Sinha, who was involved in interfering with the income tax assessment of Ponty Chadha. He was also involved in the stock guru scam which is apparently still under investigation. Despite that, Chowdary was still appointed. We challenged his as well as the appointment of another person in the CVC. Because of our information that he played a major role in suppressing the information, we have filed an application. When I got these documents in October, I sent a complaint to CVC, CBDT, the Enforcement Directorate, CBI and to the SIT on black money, saying that these are highly incriminating documents and according to the principles laid by the Supreme Court in the Jain Hawala case these should have been investigated – whether these payments were made, why were they were made, if these were bribes or some other kind of payments – but none of that was done. The matter was sought to be buried.
Therefore, we have eventually moved the Supreme Court, filed an application in the petition that we had filed challenging the appointment of the CVC and that application will be heard on Friday.
Sahara diaries mention a lot of names but they don’t specifically name the politicians, for example, like you said the Delhi CM and so on. Are there more? Who are the other prominent politicians mentioned in the list?
There’s Madhya Pradesh CM Shivraj Singh Chouhan, Delhi CM at the time, Sheila Dikshit, Chhattisgarh CM Raman Singh and the Gujarat CM at the time, Mr Modi. Mr Modi is also personally mentioned as Modiji. Largest payments are made to him in the Sahara diaries, more than Rs 40 crores. One other politician which is mentioned prominently is Shaina NC of the BJP and one of the documents says that she was being asked to intercede with the advocate general of Maharashtra for withdrawal of some case which was pending against Sahara. Perhaps the Sebi case (which was mentioned as the Bombay case in the papers).
The Modi government is already in the know of these papers because you have already written to various agencies. What are the kind of replies you got from the government?
Well, I only received one response from the CVC after ten days saying, “Will you please confirm whether you have sent this complaint?” I immediately confirmed that I sent this complaint and I am not aware as to what they have done, or whether they have done anything in this matter because unfortunately, it seems that the CVC himself, as the head of investigation of income tax was responsible for suppressing this.
The income tax department has already filed an appraisal report back in 2015. What could the Modi government do right now to investigate the matter?
Of course, no investigation by an agency controlled by the government would carry any credibility in this matter because the names of top people in the government are mentioned as major recipients of these pay-offs. This would have to be investigated by SIT or some court monitored investigation by the Supreme Court. That is what we had asked for. Investigation in this case was easily possible because the people who are the carriers of the money are mentioned. The IT department had found out that they were employees in the personal staff of the chairman. Uday Sawant, Jaiswal and so on who were mentioned, they were all identified. The telephone and mobile numbers they were using had also been identified. It was easy to find out whether these people who are mentioned as being the carriers of the payment were indeed at those places where the payments are shown to have been made. That could have been easily investigated and then these people ought to have been questioned. They would have to explain what they did with the cash which has been shown as received.
All that should have been done. Of course, they would deny it but the investigation still needed to go into all these aspects. They could have checked if the persons who have received and delivered the money were present at the place and their phone records would have shown.
The Birla papers make it apparent that the minister of environment was made some payments by the group in exchange of certain favours like the environmental clearance Hindalco was seeking at the time. Do the Sahara papers also mention what were the favours done to these companies in exchange of the alleged payments?
The Sahara papers don’t mention that. In fact, some of the Sahara papers seem to suggest that these were general kind of payments being made to influential people in order to keep them happy. Perhaps close to the elections, as political donations. But in any case, many of these people were senior public servants. Sahara certainly had operations in all these states – Gujarat, Madhya Pradesh, Chhattisgarh, Delhi – one would have to investigate if there was any sort of quid pro quo or they were just political or black money donations which have not been shown by politicians or in their party returns. The Sahara papers also mention payment of Rs 15 crores to the BJP office, and all this happens at the time when Mr Modi had taken over as the [prime ministerial candidate] of the BJP.
This brings us to the larger question about the politics-government-corporate nexus. A few months ago you were also highlighting the Essar Tapes, which showed Essar tapping into phones of various prominent persons in the government and elsewhere. A few months ago we also came to know of a scam where both Adani and Ambani and various other private companies over-invoiced the coal that they imported and the burden of which directly passed onto the consumers. So we have three scams and what do you want to say about the Essar Tapes and the over-invoicing of coal imports?
Of course, those are major scams. It’s not just the Essar tapes but also the Essar emails. There was a whistle blower in the corporate office of Essar Corporation who uncovered a very large number of internal emails of Essar which showed a very systematic attempt to bribe a large spectrum of senior public servants, somewhat similar to the Sahara case. Those emails have been with the government; they are subject matter of a petition which I have filed in the Supreme Court. The government has been asked to respond to that but there has been no response so far. They have just been sitting on this matter because a large number of these pay-offs implicate senior members from the BJP, the ruling party. They implicate Congress people also, just as the Sahara and Birla papers do, but because they also implicate the BJP people this government has just been sitting on them.
Similarly, with the over-invoicing of coal by the Adani group as well as some others like Reliance where the department of revenue intelligence itself has uncovered the entire evidence showing over-invoicing through bogus companies registered in tax havens through whom this over-invoicing was done. All this evidence was available with the government but again nothing was done. I had myself sent two fully documented complaints, one against Mukesh Ambani, which showed that Rs 6500 crores was brought in to four 100% owned Mukesh Ambani companies through a fictitious Singapore company which had no assets, no income, no business. But the largest FDI from Singapore came in through that fictitious company. The Indian high commission in Singapore had at that time, in 2011, written to the ministry of finance saying that this is a very suspicious FDI and needs to be investigated. But the UPA government didn’t do anything about this. When I came to know, Mr Modi had just become the prime minister and I sent a complaint to him that this is the evidence which the Indian high commission has itself written, which means that Reliance has siphoned out money from their company through over-invoicing, which is also reported by the CAG in their KG D6 basin, that they had over-invoiced a lot of their purchases and that siphoned out money has been thereafter laundered through this fictitious Singapore company and brought into Mukesh Ambani’s companies. Nothing was done.
I wrote the same thing against Anil Ambani. Some investigations were carried out by the IT department. About $750 million were again brought in through the Singapore route through a bogus, fictitious company to 100% Anil Ambani owned companies. These are classic ways of money laundering. Nothing has been done about this.
It was well known that participatory notes is one very large anonymous investment device through which black money is laundered and invested in the stock market. Because participatory notes are anonymous you can’t come to know the holder of the notes, they are purchased from outside and through that investments are made in the stock market in India. I had written to Mr Modi immediately after he became prime minister that you are talking about curbing black money, you need to at least stop these anonymous investment devices like participatory notes and FDIs from tax haven companies. When a tax haven company makes an investment in India, you can’t come to know as to who are the beneficial owners and shareholders of that company. Therefore, ways like the Singapore route, are easy to launder illicit money. If the prime minister wanted to carry out a surgical strike against black money he should have gone against all these – Essar, Ambanis, Adanis, holders of participatory notes, investments coming from tax havens, or against holders of Swiss bank accounts or people with their names in the Panama Papers. He would have got lakhs of crores of black money and that would have been a surgical strike on the people who are known to be holding black money in large amounts.
Instead of that, this demonetisation is touted as a surgical strike when you know that you are taking out 86% of the currency in circulation. Half of the poor people in this country have no bank accounts, ATM cards and therefore, they are holding all their savings in cash. They can’t use that. They are in very serious trouble. Farmers are in trouble, people are dying in queues and due to malnutrition, people are losing their jobs. The whole economy has taken a huge hit, especially the poor people, in the name of carrying out a surgical strike on black money when in fact it is just a ham-handed attempt. As Arun Shourie pointed out, it’s a strike against currency. It’s a strike against the legal tender.
Why have the CBI, the income tax department and the Central Vigilance Commission refused to probe potentially incriminating documents seized from the two business houses, a petition before the Supreme Court asks.
Why have the CBI, the income tax department and the Central Vigilance Commission refused to probe potentially incriminating documents seized from the two business houses, a petition before the Supreme Court asks.
Email from the Aditya Birla group. Credit: Prashant Bhushan
New Delhi: The Sahara Group and an Aditya Birla Group company allegedly made massive payments to prominent Bharatiya Janata Party and Congress politicians in 2013-14 and 2012 respectively, according to a set of documents bundled along with an application in a pending writ petition filed by citizen collective Common Cause.
The 2015 petition (Common Cause & Ors. versus Union of India & Ors.) against the appointment of the central vigilance commissioner (CVC) and the vigilance commissioner is currently pending in the Supreme Court. Advocate and activist Prashant Bhushan is the counsel for the petitioners.
The allegations over payouts to politicians made in the application, filed on Tuesday, have been cited by Bhushan as proof of K.V. Chowdary’s unsuitability for the post of CVC. The application alleges that he did not pursue the matter in his earlier job as head of the income tax department when junior officials first unearthed evidence of wrongdoing.
Payout Allegations
The Sahara payments were allegedly made to well-known political leaders. Among the entries against which large sums of money are listed are the ‘CMs’ of Gujarat, Delhi, Chhattisgarh and Madhya Pradesh in 2013-14. The Wire is not in a position to confirm whether these entries in the documents Bhushan has filed refer to the chief ministers of those states.
Common Cause’ s application calls for a probe into the sizeable set of documents allegedly seized by the income tax department (IT) and the Central Bureau of Investigation (CBI) during a search operation of Hindalco Industries’ offices in 2013 and a raid of Sahara India group offices in Delhi and Noida in late 2014.
On Tuesday, The Hindu first reported the existence of these documents.
The alleged payments made to politicians, for reasons not immediately known, are detailed in the form of Excel sheets and cryptically-worded emails in these documents.
Records of the Aditya Birla Group seized during the 2013 raid apparently “revealed that a payment of Rs. 7.08 crore was made during the period from 09.01.2012 to 02.02.2012 under the heading ‘Project-J-Environment & Forest’ ”.
According to the application, “it is to be noted [that] during Ms Jayanti Natarajan’s tenure as Minister, Environment & Forest, as many as 13 projects of Aditya Birla Group companies were cleared between 08/11/2011 and 17.06.2013.”
During the 2014 campaign, Narendra Modi, who was then the BJP’s prime ministerial candidate, attacked Natarajan for levying a so-called ‘Jayanti tax’ on companies – a charge she has strongly denied.
The documents also indicate noted Congress and BJP politicians among the list of recipients.
What does the interim application ask for?
Bhushan has alleged that both the CBI and the income tax department buried serious evidence of corruption against prominent politicians. He said that the documents recovered during the CBI raids on Sahara group (2014) and Birla group (2013) show that the corporates may have paid bribes – running into crores – to politicians in exchange for various favours, which are presently unknown.
The activist-advocate, who claims to have got the documents from unnamed whistle-blowers, filed the application on behalf of petitioners Common Cause on Tuesday to seek the Supreme Court’s intervention in the matter. Talking to The Wire, he said, “Ideally, the CBI should have investigated the contents of the documents found in its raids. Instead, it handed over the sensitive information to the income tax department, which quietly buried the matter.”
In their writ petition last year, Common Cause had alleged that the appointment of Chowdary as the CVC was “illegal and arbitrary”. Chowdary was the chairman of the Central Board of Direct Taxes, the apex body of the income tax department, during the time the CBI handed over the documents to the IT department. Immediately after his retirement from the post, he was appointed as the CVC and also as an advisor to the special investigation team that the Modi government constituted to probe black money sources.
Interestingly, he became the first Indian Revenue Service officer to hold the office of CVC – a position usually given to Indian Administrative Service officers.
Sahara payout
Common Cause’s application attaches a number of documents as annexures. Annexure A8, A9 and 11 contain copies of the documents allegedly recovered from Sahara India group offices during an income tax raid on November 22, 2014.
“The petitioners have come in possession of a few pages containing a record of cash transactions from May 2013 to March 2014. The said pages were apparently signed by the income tax officer, one person from the Sahara group and two witnesses,” the application says.
What do these cash transactions show? According to the application, the “logs suggest that cash was apparently transferred to several important public figures”.
Annexure 8 includes a set of three Excel sheets, the third of which is signed by income tax officer Ankita Pandey. As shown below, on September 23, 2013, a sum of “Rs. 10000000.00” is shown against the entry “CM Delhi”. On September 29, 2013, a sum of Rs. “50000000.00” is shown against the entry “CM MP (sh neeraj vashisht)”.
On October 1, 2013, a sum of Rs. “40000000.00” is shown against the entry “CM Chattisgarh (sh nandi ji)”. Finally, on October 30, 2013, a sum of Rs. “250000000” is shown against the entry “CM GUJRAT”.
An excel sheet from the Sahara documents seized. Credit: Prashant Bhushan
An excel sheet from the Sahara documents seized. Credit: Prashant Bhushan
How credible are these documents?
The interim application in the writ petition notes that one of these pages “came into the possession of Mr. Ram Jethmalani, senior advocate and Member of Parliament”.
Jethmalani, apparently, requested the Delhi government on June 28, 2016 to “compare the signatures of Ankita Pandey on the Sahara Diary with her known signatures”. It was referred to a forensic laboratory and the laboratory apparently “gave on a report on July 1, 2016 that the two signatures were made by the same individual”.
According to the interim application, the lab report “reinforces the credibility of the document that has now come in the petitioner’s’ possession”.
Birla payout
Documents relating to the Birla payouts come from an “investigation in relation to coal block allocations to Hindalco Industries, an Aditya Birla group company”. The CBI conducted simultaneous search operations in four cities – New Delhi, Mumbai, Secunderabad and Bhubaneswar on October 15, 2013.
The Birla documents apparently consist of two questionable payments. The first, as noted above, was the payment of Rs. 7.08 crore under the “heading ‘Project-J- Environment & Forest”.
The second, was an email obtained from the seized laptop of one Shubhendu Amitabh, who is an Aditya Birla Group executive president. “An e-mail dated 16.11.2012 containing the cryptic entry, ‘Gujarat CM- 25 cr (12 Done-rest?)’ was also recovered from the said laptop”, the application said.
Another document, enclosed as Annexure A3, signed by the income tax officials on November 30, 2013, shows income tax agents questioning Amitabh over this specific email.
‘Gujarat CM’ means ‘Gujarat Alkali Chemicals’, Birla man told IT department
“You have also stated that the first line containing note as “Gujarat CM -25 Cr (12 Done – rest?) related to Gujarat Alkali Chemical. Please state what does C and M stands for?” asked the income tax official. (sic)
“These are purely personal notes. Not meant for SMS or email transmission. I noted the three points purely for my personal consumption. And, the first note is only to note for my knowledge and consumption – a business development at Gujarat Alkali Chemicals, a company engaged in caustic soda as well…As they were personal random notes, I used abbreviations. GUj CM stands for Gujarat Alkali Chemicals,” Amitabh replied. (sic)
On further probing by the income tax officials on whether he used the abbreviation “Gujarat CM” for Gujarat Alkali Chemicals in other places, Amitabh said, “In my regular communication through email/sms, I might have at least written Gujarat Chemicals…but since this was a note for my personal consumption only, I did not expand upon them.”
Following this exchange, the income tax department in a report and as seen in the application, notes that given the “highly incriminating nature of the transactions” and “evasive replies” made by Amitabh, it would be imperative for the “assessing officer to scrutinise the data.”
However, Bhushan said that the documents show that after initial enquiries, the income tax department brushed the allegations under the carpet.
On Tuesday, Delhi chief minister Arvind Kejriwal and the Aam Aadmi Party cited the Birla entries to make allegations against Prime Minister Narendra Modi, who was chief minister of Gujarat in 2013. The AAP tweeted a picture of the “Gujarat CM-25 cr” email from its official handle along with a direct allegation of corruption against Modi.
When The Wire reached out, both Congress and BJP leaders refused to comment on the charges levelled by Bhushan. They said that they have not read the contents of the application, and therefore, would not like to comment.
Note: This story was edited at 7:30 PM on November 16th to include the name of the petitioners. An earlier version of this story erroneously identified Prashant Bhushan as the petitioner. He is their counsel. The error is regretted.
India’s MNCs must learn to take it slowly in small bites and avoid being swept along by a desire for size rather than precise business logic.
Tata Steel’s decision late last night to seek buyers for its Corus steel business in the UK is the latest example of Indian companies finding they rushed too quickly and expensively into large foreign acquisitions that were all the rage a decade ago. Some have been successful, notably Tata’s Jaguar Land Rover (JLR) car business but, for many, the burdens of rising debt, falling markets and lack of international savvy and expertise have led them to sell what they had bought during the “India shining” years of the 2000s.
The Corus decision is a blow for the prestige of both Tata, one of India’s largest and most respectable conglomerates, and its former chairman, Ratan Tata, who drove the $13.6 billion acquisition in 2007 despite opposition from some colleagues. This was part of a plan to spread the group’s many businesses across the globe – $20 billion was spent on foreign take-overs during Ratan Tata’s time in charge. Shedding Corus is the biggest and toughest decision taken by Cyrus Mistry, who took over as head of the group from Ratan Tata in 2012, presiding over (2012 figures) $100 billion-plus revenues, more than half from 80 countries overseas.
It is also a blow for India – both the UK and Indian governments have been proud to boast that Tata is the biggest employer in the UK’s manufacturing industry, which it will no longer be once it loses Tata Steel’s 15,000 employees. Efforts have now started to find buyers at the same time as trade union opposition is being organised, with calls for the British government to help in what is becoming a major political issue over the future of the UK’s steel industry.
The deal looked logical because of synergy between Tata’s iron ore mining and steel producing business in India with Corus’s blast furnaces, rolling mills and other allied operations in the UK. But the purchase price was high, the steel slumped internationally and Corus could not compete. With its mentor, Ratan Tata, gone and Mistry needing to shed debt, last night’s news was perhaps inevitable.
Up for sale is Britain’s biggest steelworks at Port Talbot. It employs 4,000 people and is losing £1m a day, which will make it hard to find a buyer though there are some suggestions the UK government might consider temporary nationalisation. Plants in South Yorkshire, County Durham and Northamptonshire will also be put on the market.
In May 2007, I wrote in Fortune magazine about “the first flush of nationalistic fervour” that had greeted the Corus takeover and commented that there had been “so much foreign acquisition talk by Indian companies it seemed as if herd instinct had replaced financial caution”. And indeed, it had. Indian companies had reported 34 foreign acquisitions totalling $10.4bn as completed or pending so far that year, according to Dealogic, a British research firm. The total for the year 2006 was $23bn.
Tata Corus steel plant at Port Talbot in the United Kingdom. Credit: Ben Salter/Flickr CC 2.0
(That is small compared with China’s current international acquisitions. TheWall Street Journal has reported Chinese companies did deals worth roughly $68 billion in the first few weeks of this year, which is about half the total for all of last year, according to Dealogic.)
“Many companies had surplus cash, access to easy money, and hubris – an over-inflated view of what they could achieve,” a Mumbai banker said to me today.
To begin with, the overseas acquisitions were seen as an example of Indian companies growing up enough to venture outside their home markets. But by about 2009-2010, the story changed because bankers and businessmen wanted to castigate the Congress led government and its environment minister Jairam Ramesh, for making India such an unattractive place to invest that they were fleeing abroad. That may have been true in some cases, but it was mostly political spin.
Unsustainable
Coal mines, steel plants, and power and other infrastructure projects top the lists of industries where Indian companies rushed headlong into unsustainable commitments.
Leading the pack of companies with problems caused by expanding too fast and too far is Arcelor Mittal, the world’s largest steel company that is controlled by Calcutta-born London based Lakshmi Mittal, which made an $8 billion loss last year.
Companies shedding assets include Suzlon Energy, the world’s fifth-largest wind turbine maker and a stock market favourite some years ago, and a clutch of new infrastructure companies such as GMR, GVK and Lanco with interests in airports and other power, infrastructure and mining businesses. Fortis Healthcare, run by part of the family that developed the Ranbaxy pharmaceuticals company, had a hospitals and allied businesses’ buying splurge in Singapore, Australia, Hong Kong and Vietnam and then shed assets.
Bharti AirTel, India’s biggest mobile telecom operator, over-reached when it assumed it could easily cope with mobile businesses across Africa. It has sold operations in places such as Burkina Faso and Sierra Leone as well as shedding a telecom towers business to raise cash. Mukesh Ambani’s Reliance Industries got out of a US shale gas investment (though it profited from it financially, investing $254m and selling for $1bn five years later).
The Aditya Birla group did well with smallish acquisitions in carbon black and viscose fibre but then, seemingly left behind by other companies that were rushing abroad, acquired Novelis, a US industrial aluminium company, for $6 billion. That seemed a neat fit with Birla’s Hindalco bauxite and aluminium producing business, but Birla paid too much and has been saddled with a financial burden.
There have of course been successes. Tata Motors provided Jaguar Land Rover with the financial strength and management commitment and focus that it had lacked under Ford, the previous owner. It was thus able to build on design work for new models that Ford had started.
Bharat Forge (Kalyani group) and the Mahindra group have also done well with relatively small scale acquisitions in manufacturing businesses linked with the auto industry. There have also been successes in the information technology area with the industry leaders such as Tata’s TCS, Wipro and Infosys plus smaller players, in healthcare by the Godrej group for example, and in the pharmaceutical industry.
So all is not lost and lessons have maybe been learned – take it slowly in small bites and avoid being swept along by a desire for size rather than precise business logic.
The Corus decision is a blow for the prestige of both Tata, one of India’s largest and most respectable conglomerates, and its former chairman, Ratan Tata, who drove the $13.6 billion acquisition in 2007 despite opposition from some colleagues. This was part of a plan to spread the group’s many businesses across the globe – $20 billion was spent on foreign take-overs during Ratan Tata’s time in charge. Shedding Corus is the biggest and toughest decision taken by Cyrus Mistry, who took over as head of the group from Ratan Tata in 2012, presiding over (2012 figures) $100 billion-plus revenues, more than half from 80 countries overseas.